Friday, April 25, 2014

A Buy-Sell agreement can be a useful planning tool for emerging companies as well as more stable, privately owned companies. In the context of an emerging company, the use of a Buy-Sell agreement provides a pathway for an orderly exit from the business by an owner if the owners do not see eye-to-eye with each other with respect to creative direction, allocation of responsibilities or other issues. (more…)

Wednesday, April 23, 2014

The 7520 rate for May has increased to 2.4%.

The May 2014 Applicable Federal Interest Rates can be found here.

Wednesday, April 16, 2014

The New York Budget bill made changes not only in the estate tax arena, as previously reported on this blog, but also to the income taxation of certain trusts.

Under law prior to the passage of the Budget bill, a resident trust created by a New Yorker was entirely exempt from New York income tax if there was (i) no New York resident trustee, (ii) no assets located in New York and (iii) no New York source income. The new law, effective for calendar years beginning January 1, 2014, provides that a New York resident beneficiary receiving a distribution of income from a New York State resident trust which is exempt from New York State income tax, will be taxed on that “accumulated distribution”. The new accumulation distribution tax, will not apply if the accumulated income was earned before 2014 or if the trust itself is subject to New York State income tax or for periods before the beneficiary become a New York resident. This is also not applicable to grantor trusts, where the income of the trust is taxed to the grantor, rather than the trust or its beneficiaries. (more…)

Tuesday, April 8, 2014

statuteoflibertyAs previously reported on this blog, Governor Cuomo and the New York State legislature, both Assembly and Senate, were busy at work on the budget which contained modifications for the trusts and estates arena. A bill has finally been passed, which looks different from some of the earlier proposals. The new bill impacts the estate and trust world as follows:

Basic Estate Tax Exclusion Amount increases are to be phased in as follows for New York residents or non-residents owning real property located in New York State during the period listed:

 

 

 

  • April 1, 2014 – March 31, 2015 – $2,062,500;
  • April 1, 2015 – March 31, 2016 – $3,125,000;
  • April 1. 2016 – March 31, 2017 – $4,187,500;
  • April 1, 2017 – December 31, 2018 – $5,250,000;
  • January 1, 2019 and beyond, the basic annual exclusion amount corresponds with the Federal exemption ($5,000,000 indexed for inflation beginning in 2010).

(more…)

Friday, April 4, 2014

Inside the Administration’s recently released budget proposal are a few notable proposed changes to the estate, gift and GST taxes, including a return to 2009 rates and exclusions, and the elimination of Crummey gifts and perpetual GST trusts. Keep in mind that the budget proposal is merely a wish list and many of these proposals have been on the list for many years without making it into legislation. Here are the proposals for the 2015 budget: (more…)

Wednesday, April 2, 2014

Originally posted on bryancavefiduciarylitigation.com

It is uncommon to see modern trusts that require distribution of all income but preclude distribution of any principal to a beneficiary. Since the characterization of income and principal can be subject to multiple interpretations, precluding any distribution of principal often can lead to legal disputes. In Favour v. Favour (not for publication), the Arizona Court of Appeals disagreed with an Arizona superior court’s ruling that “the income beneficiary of [a] Martial Trust is entitled only to the annual ‘distributable net income (“DNI”)… reported on the federal income tax return, and no more than that.” The Will also specified that it was intended to qualify as “qualified terminable interest property” (“QTIP”) for which an election could be made under Section 2056(b)(7). (more…)