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Richard Yam, J.D.

tax law changes

Tax Proposals: Big Changes to Come

By and Blog
On September 13, the House of Representatives Ways and Means Committee released a set of proposals as part of a $3.5 trillion spending and tax bill that Democrats hope to pass in the fall. If passed, the legislation would advance many of President Biden’s economic and social policies. Many of the details will likely change as the bill makes its way through a series of deliberations and votes. But the initial draft provides a good deal of insight about what we can expect. Below is a summary of the proposed changes and some key take-aways for clients: Income and Investments Increases the top individual tax bracket to…
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trust tax

How Are Trusts Taxed? FAQs

By Blog
With the tax season fast approaching, you may have questions about how your trust is taxed, who is responsible for tax filings, or how trust income taxes get paid. This blog will answer some common questions you may have about the taxation of your trust. Do all trusts pay income taxes? It depends. A trust is a separate legal and taxable entity. Whether the trust pays its own taxes depends on whether the trust is a simple trust, a complex trust, or a grantor trust. Simple trusts and complex trusts pay their own income taxes. Grantor trusts do NOT pay…
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cliff

Mitigate New York’s Estate Tax Cliff with Smart Estate Planning and Gifting Strategies – 2021 Update

By and Blog
While the large increase in the federal estate tax exemption has provided many with federal estate tax relief, New Yorkers must continue to plan for New York estate tax. For a quick review of the New York Estate Tax “Cliff” basics, see the “Understanding New York’s Estate Tax “Cliff” blog post. What is the current exemption from New York estate tax again? The current New York estate tax exemption amount is $5,930,000 for 2021. Under current law, this number will remain until January 1, 2022, at which point it will rise again with inflation. Who does the Cliff affect? Everyone…
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tax law changes

Estate Planning in Light of Tax Reform: Your Questions and Our Answers – 2021 Update

By and Blog
This post will help you unpack some of the estate and gift tax provisions of the 2017 Tax Reform Act, as well as answer some of the most pressing questions raised by the changes. In a nutshell, what stayed the same and what changed? One major item that stayed the same is the simple existence of an estate tax. The initial tax reform bill from the House called for a complete elimination of the estate tax, which didn’t make its way into the final law.  Trump had also talked about altering the current date-of-death basis step-up for gains above a…
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gst tax

Basics of Federal Estate, Gift and Generation-Skipping Transfer (“GST”) Tax – 2021 Update

By and Blog
The bad news is that there is a Federal tax on assets that you give away during life, at death, and to individuals two or more generations below you. The good news is that this tax will only apply to the wealthiest Americans and, even so, there are strategies you can use to minimize or avoid its application. The Federal estate, gift and GST tax only kicks in above a certain dollar threshold. Furthermore, there are additional wealth transfer strategies that do not trigger any tax at all if structured properly. Taxable Gifts There is a Federal estate and gift…
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SLATs

Spousal Lifetime Access Trusts (SLATs): FAQs – 2021 Update

By Blog
What is a Spousal Lifetime Access Trust (SLAT)? It is a trust that you (the grantor) set up for the benefit of your spouse and your descendants. You would make a gift to the SLAT, using some of your federal lifetime gift exemption (currently $11.7M in 2021) to shield that gift from gift tax. While you give up all your rights and control over the gifted assets, your spouse will have access to the gifted assets as beneficiary of the SLAT. When does it make sense to have a SLAT? You should consider creating a SLAT if you have a…
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CLAT

Charitable Lead Annuity Trusts (CLATs)

By Blog
What is a Charitable Lead Annuity Trust (CLAT)? A charitable lead annuity trust (“CLAT”) is a type of charitable trust where a charity, donor advised fund, or foundation of the grantor’s choosing (the “Lead Beneficiary”) receives annual payments, either for a term of years or the grantor’s lifetime. At the end of this defined period, the remaining CLAT assets are distributed to the CLAT’s non-charitable beneficiaries, who are usually the grantor’s descendants, or trusts for the descendants’ benefit. How do CLATs work? For CLATs, the Lead Beneficiary receives fixed payments each year. The term of the CLAT may be for…
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charitable remainder trust

Charitable Remainder Trusts (CRTs)

By Guides & Whitepapers
What is a Charitable Remainder Trust (CRT)? It is a trust where non-charitable beneficiaries (usually the grantor and grantor’s spouse) receive payments at least annually during their lives or for a number of years, and a charity receives the trust assets remaining at the end of the trust term. A charitable trust is also referred to as a “split interest trust”. This is because the beneficial interests in the trust are “split” between the initial non-charitable beneficiaries and the charitable beneficiaries that receive what remains at the end of the trust term. We will refer to the initial non-charitable beneficiaries…
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creating trust

What to Consider When Creating a Trust

By and Blog, Guides & Whitepapers
You’ve decided to create and fund a trust as part of your overall estate plan. Now, you will need to make decisions that impact who controls the trust, how and when beneficiaries receive trust distributions, and how the trust is taxed. When creating a trust, here are the basic questions you will need to answer: Who are the beneficiaries? A trust can be for a single beneficiary or for multiple beneficiaries (often called a “pot trust”). Sometimes, a pot trust is created for a period of time, and then splits into separate shares at a later date. E.g., mom creates…
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tax cheat sheet

2021 Federal & State Estate and Gift Tax Cheat Sheet

By and Guides & Whitepapers
Here we have provided a “cheat sheet” to keep in mind for 2021 federal estate, gift and GST exemptions, as well as exemptions and inheritance tax consequences in specific states where a number of our clients reside. Federal Estate, Gift, and GST Tax Below is a summary of the current federal estate, gift, and generation-skipping transfer tax provisions for 2021. Note that, under current law, the increases in exemption amounts that began in 2018 are set to expire in 2026, at which point they will revert back to the pre-2018 numbers (i.e., $5,490,000 per person, indexed for inflation). Gift and…
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