Posted tagged ‘trustee accounting’

Estate Settlement and Trust Administration Seminar

August 6, 2015

LocationEthan Allen Hotel, 21 Lake Ave Ext, Danbury, CT 06811

Date:  September 24, 2015

Time:  7:00 to 9:00 (Doors open at 6:30)

Register here:  Seminar Registration.  Or, call 203-744-1929 for reservations.  For more contact information, go to the end of this post.

No admission charge.  Our seminars are always strictly educational.

Description

We will cover the topics listed below.  Each listed Part corresponds to a Part in our Estate Settlement and Trust Administration video which you can see on YouTube here:  Estate Settlement and Trust Administration Video.

To get the most out of the seminar, attendees should view the whole video before attending.  We understand that time may not permit that, however, and we are structuring the program to make certain it will be well worth your time even if you do not view the video.

Send Us Your Questions

If you think of a question before the seminar, let us know right away before you forget.  If the question is appropriate for a group educational program, we will try to answer it during the program.  Send your questions here: rsl@danburylaw.com (Richard S. Land) or here ksg@danburylaw.com (Kasey S. Galner).

 Seminar Topics

Part 1:  Introduction.  Estate settlement steps starting with the probate application and the inventory.

Part 2: A continuation of estate settlement steps including problems relating to real estate, tangible personal property and estate and income taxes.  The importance of identifying problems early.  A description of our estate settlement letter and estate settlement checklists.  A discussion of the importance of post mortem tax planning.

Part 3:  Accounting requirements and fees and costs including the fees of the Probate Court, Executor fees and attorneys.

Part 4:  A description of trust administration, the duties of a trustee and the related risks.

Part 5:  The most common problems related to being a trustee including accounting, investing and self-dealing.

Part 6:  A continuation of a description of the Trustee’s most common problems including personal liability for contracts entered into as trustee and claims based on a trustee’s negligence and torts including claims related to contaminated property.  Trustee compensation is also discussed.

SEMINAR LOCATION AND TIME

The seminar will be on September 24, 2015, at the Ethan Allen Hotel, 21 Lake Ave Ext, Danbury, CT 06811 from 7:00 p.m. to 9:00 p.m. The doors will open at 6:30. Refreshments will be served.

These seminars are always well attended and space is limited. If you wish to attend, or if others you know are interested in attending, to reserve space call us (203-744-1929) or send an e-mail message to me (Richard Land at rsl@danburylaw.com) or Kasey Galner (at ksg@danburylaw.com) or Deb Jewell (at doj@danburylaw.com) containing your name, number attending, telephone number and e-mail address.

You may also register here: Seminar Registration.

 Posted on 8/6/2015 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

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Trusts and Trust Administration Video Finished

November 23, 2013

Our  video/slideshow presentation on Trusts and Trust Administration  has been completed and posted to YouTube.

The video (in 3 Parts) covers trust administration including a Trustee’s duties, risks that Trustees face, applicable rules and regulations, common problems Trustees face, and Trustee compensation.

You can view the video here:

We hope you find our Trusts and Trust Administration video informative.

 If you have any questions, please contact us.

 Posted on 11/23/2013 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Estate and Trust Administration Video Finished

November 10, 2013

Parts 4, 5 and 6 Posted to YouTube

The trust administration portions (Parts 4, 5 and 6) of our  video/slideshow presentation on Estate Settlement and Trust Administration in Connecticut  have been completed and posted to YouTube.

The videos cover trust administration including a Trustee’s duties, risks that Trustees face, applicable rules and regulations, common problems Trustees face, and Trustee compensation.

You can view Parts 4, 5 and 6 here:

Estate and Trust Administration Part 4 (Trusts):  What is a trust?  What is trust administration? What are the rules that apply to trust administration?  What does a Trustee do?  What risks are Trustees exposed to?  What are the Trustee’s duties?

Estate and Trust Administration Part 5 (Trusts):  Part 5 covers common problems faced by trustees while administering a trust including issues relating to accounting, investments and self-dealing.

Estate and Trust Administration Part 6 (Trusts):  Part 6 (the final Part) continues coverage of common problems faced by trustees while administering a trust including potential claims related to contracts that a trustee makes while administering a trust, claims based on a trustee’s negligence and other torts, claims based on environmental contamination of trust real property, and claims related to improper payments and distributions. This Part also includes a brief discussion on Trustee compensation.

To view the complete video starting with Part 1 click on the image below:

We hope you find our Estate Settlement and Trust Administration videos informative.

 If you have any questions, please contact us.

 Posted on 11/10/2013 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Estate Settlement and Trust Administration Video Posted to YouTube

June 5, 2013

 New Video: Estate Settlement and Trust  Administration in Connecticut

Parts One and Two of our video/slideshow presentation on Estate Settlement and Trust Administration in Connecticut  have been posted to YouTube.  They discuss estate settlement up to preparation of the final account.

Additional parts will be posted in the future dealing with fiduciary accounting, expenses involved in estate settlement and trust administration, and important principles of trust administration.

Go directly to the YouTube Playlist. Click on the image below:

Web-Playlist-Image

You can view Part I separately (13 minutes) here:

Estate and Trust Administration in Connecticut Part 1

Connecticut Estate and Trust Administration Part 1

You can view Part 2 separately (15 minutes) here:

Estate and Trust Administration in Connecticut Part 2

Connecticut Estate and Trust Administration   Part 2

We hope you find our Estate Settlement video informative.  Stayed tuned for the rest of the videos in the series.

 If you have any questions, please contact us.
 
 

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

 

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

 
     
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Basic Estate Planning Video Updated to Reflect ATRA

February 24, 2013

The American Taxpayer Relief Act of 2012 (“ATRA” effective January 1, 2013) will change everything about estate tax planning.  We recently updated our Basic Estate Planning Video to reflect ATRA and posted it to YouTube.

Background

April 30, 2013 (Updated April 20, 2015)

We offer seminars to our clients, their advisors, and other friends of the firm, every year.  One of the most popular has been our Basic Estate Planning Seminar.  On March 14, 2013, we offered our Basic Estate Planning seminar at the Maron Hotel, Danbury, Connecticut.  The seminar covered the topics mentioned below.

Those who could not attend the seminar may be interested in taking a look at the Basic Estate Planning video that we recently finished updating to reflect the recently enacted American Taxpayer Relief Act of 2012 (effective January 1, 2013).

The presentation is in 15 parts.  Click on the red  “Basic Estate Planning after ATRA (15 Parts)”  heading below and then click “Play All” under “Basic Estate Planning” at the top of the YouTube page.

Basic Estate Planning after ATRA (15 Parts)

We describe each of the parts below with an individual link to each one. 

Part 1:  Introduction.  Wills and probate property vs. nonprobate property.

Part 2: Beneficiaries, mistakes with nonprobate property, trust basics, guardian appointments, life insurance beneficiary designations, and estate taxes.

Part 3:  Wills, the estate taxation of life insurance death benefits, tax issues and asset protection issues relating to Wills, and disclaimer Wills.

Part 4: Formula marital deduction Wills, exemption trusts, risk of disinheriting the surviving spouse as estate tax exemptions increase, the portable estate tax exemption, and asset protection bypass trusts.  

Part 5:  Formula marital deduction Wills (and exemption trusts) vs. disclaimer Wills (and disclaimer trusts), and common estate planning mistakes.

Part 6:  Common estate planning mistakes continued, the duties of an Executor, the duties of the Trustee, the duties of a guardian, planning for post-death cash needs, and the generation skipping tax.

Part 7: Retirement plan accounts (IRAs, 401(k) plans, 403(b) accounts, etc.), estate taxation on retirement plan accounts, the risk of a circular tax on tax problem at death of account owner, life insurance and irrevocable life insurance trusts as a solution.

Part 8: Retirement plan accounts and related income tax issues, effects of beneficiary designations on deferral periods, spouse as beneficiary and tax deferred rollovers, required minimum distributions, and tax treatment of inherited IRAs, and the five year payout rule.

Part 9: Revocable living trusts, the living trust as a Will substitute, probate avoidance, planning for incapacity, and establishing a revocable living trust.

Part 10:  Comparison of revocable living trust plan with non-living-trust plan, treatment of lifetime issues, powers of attorney as an alternative to the revocable living trust, and what it means to avoid probate.

Part 11:  Comparison continued, avoiding ancillary probate in other states where real property is located, creditors’ claims and safe harbors for the Executor, and income and estate taxes.

Part 12:  Comparison (continued), accounting requirements, releases from liability, continuing trusts and continuing probate court jurisdiction, reasons for considering revocable living trusts, management during incapacity, and real property in other jurisdictions.

Part 13:  Reasons for considering a revocable living trust (continued), controversial estate plans, probate notice requirements, disruption of support for third parties, probate and related delays, simplifying estate settlement for survivors, nonreasons for considering revocable living trusts, the living trust as tax neutral, and probate court fees.


Part 14: Gift planning, gift and estate tax exemptions, exclusions for small gifts, gifts to education funds (529 plans), exclusions for qualified tuition and medical costs, gift tax marital deductions,  gifts to U.S. citizen spouse, and gifts to noncitizen spouse.

Part 15: Gifts of life insurance policies, incidents of ownership, irrevocable trusts as owner, three year rule relating to transfers of life insurance policies, and sophisticated gift techniques (qualified personal residence trusts, grantor retained annuity trusts, valuations for gift tax purposes, gifts to charities and charitable trusts).

 Posted on 2/24/2013 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

 

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Join Email List

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Simplify Your Estate Plan Maybe

January 13, 2013

The recent American Taxpayer Relief Act (effective 1/1/2013) could have been named the Great American Estate Planning Simplification Act. All but the very wealthy could call January 1, 2013, Federal Estate Tax Liberation Day. In other words, all but the very wealthy will be able to rely on simple Wills (Wills that don’t include complicated tax and trust provisions) unless one of the exceptions listed below applies to you.

Exceptions:

(1) You live in a state that still has an estate tax. Connecticut has an estate tax with an “exemption” of $2,000,000 and New York has an estate tax with an exemption of $1,000,000.

(2) Special problems plague your beneficiaries: creditor problems; divorces and troubled marriages; poor judgment; gambling habits; drug dependence; health problems; special needs; and poor financial training, financial skills or lack of interest in financial matters.

(3) A need to plan for long term care, whether at home or in a nursing home, for a surviving spouse or other beneficiary.

(4) Your primary beneficiary is your current spouse from a second marriage and you want to provide for the children of a previous marriage.

(5) Your children or other beneficiaries are too young to handle an inheritance or have special needs to consider.

(6) You have a business which will require management if it is to provide appropriately for your beneficiaries after your death.

(7) You are concerned about the management of your assets for you and your family in the event of your incapacity.

(8) You want to disinherit an undeserving relative or you would like to include provisions in your planning documents that your survivors might consider controversial.

(9) You have difficult-to-manage assets (for example, a closely held business, rental properties, collections of art, antiques and other creative works, weapons, etc.).

(10) You are concerned that your surviving spouse’s remarriage after your death will result in a diversion of your assets away from your children or other intended beneficiaries.

(11) You may be wealthier (for estate tax purposes) than you think you are. To determine the size of your estate, start by counting everything that will pass to others at the time of your death: home, retirement accounts, annuities, IRAs, life insurance, bank accounts, stocks and bonds—everything. Is it over $5,250,000? If so the Great American Estate Planning Simplification Act probably does not apply to you.

(12) You are in a same-sex or other “nontraditional” committed relationship (married or otherwise).

(13) Your estate is increasing and there is a strong possibility that, as a result of your efforts, luck, inflation, additional life insurance, or a combination of such factors, you will join the ranks of the “very wealthy”. In that case, it may be important for your documents to include all the existing tools for effective “post mortem” tax planning. See: It’s Not Too Late (Fixing Your Estate Plan After Your Death).

(14) You want to provide for your grandchildren by bypassing your children to some extent.

(15) You want to provide benefits for your grandchildren in amounts that may exceed one generation skipping tax exemption (currently $5,250,000).

(16) Although disadvantages of probate are often overstated, you nevertheless wish to arrange your affairs to avoid probate.

(17) Unique facts reveal unique problems that often require unique (and perhaps not simple) solutions.

With the above exceptions (and probably others I have not thought of), a simple Will may be all you need.

For those of you who currently have in place more complicated, tax sensitive documents, it may be very important for you immediately to change to something simpler. If the tax provisions in your Will are based on the federal estate tax exemption, failure to change to a simpler Will may result in unnecessary Connecticut or New York estate tax (more than $250,000 for Connecticut residents and more than $400,000 for New York residents) at the time of your death. For more details, see our companion post on this blog here: “New Risks of Unnecessary State Estate Taxes.”

For an excellent summary of the changes resulting from the Act, go to this post prepared by Clearwater, Florida, Attorney Alan Gassmann: Summary of the American Taxpayer Relief Act of 2012.

Posted on 1/13/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

For Email Marketing you can trust.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

Basic Estate Planning Seminar With Extended Q&A Format

July 5, 2012

LocationMatrix Corporate Center, Sunset Vista Room, Fourth Floor, 39 Old Ridgebury Road, Danbury, CT

Directions:  Directions to Chipman MazzuccoDon’t rely on your GPS.  Please read and follow these directions.

Date:  July 26, 2012

Time:  5:30 to 7:30 pm (Doors open at 5:00)

Register here:  Seminar Registration.  Or, call 203-744-1929 for reservations.  For more contact information, go to the end of this post.  

No admission charge.  Our seminars are always strictly educational.

Description

We will cover the topics listed below.  Each listed Part corresponds to a Part in our Basic Estate Planning Video which you can see on YouTube here:  Basic Estate Planning Video.  If you would like to have the video on DVD, please let us know and we will send you one.

The Seminar will have four sections.  Each section will summarize topics covered in the video.  Q&A will follow each section.

To get the most out of the seminar, attendees should view the whole video before attending.  We understand that time may not permit that, however, and we are structuring the program to make certain it will be well worth your time even if you do not view the video.

Send Us Your Questions

If you think of a question before the seminar, let us know right away before you forget.  If the question is appropriate for a group educational program, we will try to answer it during the program.  Send your questions here: rsl@danburylaw.com (Richard S. Land) or here ksg@danburylaw.com (Kasey S. Galner).

 Seminar Topics

Part 1:  Introduction.  Wills and probate property vs. nonprobate property.

Part 2: Beneficiaries, mistakes with nonprobate property, trust basics, guardian appointments, life insurance beneficiary designations, and estate taxes.

Part 3:  Wills, the estate taxation of life insurance death benefits, tax issues and asset protection issues relating to Wills, and disclaimer Wills.

Part 4: Formula marital deduction Wills, exemption trusts, risk of disinheriting the surviving spouse as estate tax exemptions increase, the portable estate tax exemption, and asset protection bypass trusts.

Part 5:  Formula marital deduction Wills (and exemption trusts) vs. disclaimer Wills (and disclaimer trusts), and common estate planning mistakes.

Part 6:  Common estate planning mistakes continued, the duties of an Executor, the duties of the Trustee, the duties of a guardian, planning for post-death cash needs, and the generation skipping tax.

Part 7: Retirement plan accounts (IRAs, 401(k) plans, 403(b) accounts, etc.), estate taxation on retirement plan accounts, the risk of a circular tax on tax problem at death of account owner, life insurance and irrevocable life insurance trusts as a solution.

Part 8: Retirement plan accounts and related income tax issues, effects of beneficiary designations on deferral periods, spouse as beneficiary and tax deferred rollovers, required minimum distributions, and tax treatment of inherited IRAs, and the five year payout rule.

Part 9: Revocable living trusts, the living trust as a Will substitute, probate avoidance, planning for incapacity, and establishing a revocable living trust.

Part 10:  Comparison of revocable living trust plan with non-living-trust plan, treatment of lifetime issues, powers of attorney as an alternative to the revocable living trust, and what it means to avoid probate.

Part 11:  Comparison continued, avoiding ancillary probate in other states where real property is located, creditors’ claims and safe harbors for the Executor, and income and estate taxes.

Part 12:  Comparison (continued), accounting requirements, releases from liability, continuing trusts and continuing probate court jurisdiction, reasons for considering revocable living trusts, management during incapacity, and real property in other jurisdictions.

Part 13:  Reasons for considering a revocable living trust (continued), controversial estate plans, probate notice requirements, disruption of support for third parties, probate and related delays, simplifying estate settlement for survivors, nonreasons for considering revocable living trusts, the living trust as tax neutral, and probate court fees.

Part 14: Gift planning, gift and estate tax exemptions, exclusions for small gifts, gifts to education funds (529 plans), exclusions for qualified tuition and medical costs, gift tax marital deductions,  gifts to U.S. citizen spouse, and gifts to noncitizen spouse.

Part 15: Gifts of life insurance policies, incidents of ownership, irrevocable trusts as owner, three year rule relating to transfers of life insurance policies, and sophisticated gift techniques (qualified personal residence trusts, grantor retained annuity trusts, valuations for gift tax purposes, gifts to charities and charitable trusts).

SEMINAR LOCATION AND TIME

The seminar will be on July 26, 2012, at the Matrix Corporate Center, Sunset Vista Room, Fourth Floor, 39 Old Ridgebury Road, Danbury, Connecticut from 5:30 p.m. to 7:30 p.m. The doors will open at 5:00. Refreshments will be served.

These seminars are always well attended and space is limited. If you wish to attend, or if others you know are interested in attending, to reserve space call us (203-744-1929) or send an e-mail message to me (Richard Land at rsl@danburylaw.com) or Kasey Galner (at ksg@danburylaw.com) or Lynn D’Ostilio (at lsd@danburylaw.com) containing your name, number attending, telephone number and e-mail address.

You may also register here: Seminar Registration.

 Posted on 7/4/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Planning Question and Answer Sessions. Please Take This Survey!

May 15, 2012

When Do You Want an Estate Planning Q&A Session?  Please take this survey.

 May 15, 2012.

We recently published a Basic Estate Planning video on YouTube and DVD.  We hope that you will have a chance to see it if you have not already done so.

You can see the YouTube version here:  Basic Estate Planning Screencast on YouTube

We are scheduling group meetings so that interested parties can ask questions related to the subjects in the video.  There will be no charge or obligation. 

Location: Chipman Mazzucco, Attorneys, Matrix Corporate Center, 39 Old Ridgebury Road, Suite D-2, Danbury, Ct. o6810.

We ask you to click on the link below to complete this survey so that we know what will be convenient for you.  It will take only one minute.

Survey Link

 
Thank you for participating in the survey.  It will be a great help to us in our efforts to help you.
 
 
Posted on 5/15/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

     
  Join Email List  
     

Chipman Mazzucco | Promote Your Page Too

 

Basic Estate Planning Seminar

March 29, 2012

Our Basic Estate Planning Seminar is Now a Screencast

Background

March 28, 2012

We offer seminars to our clients, their advisors, and other friends of the firm, every year.  One of the most popular has been our Basic Estate Planning Seminar.  We offer it to you now as a screencast/podcast.  It is also available on DVD. If you would like the DVD, please contact us (via Chipman Mazzucco).

You can see all 15 parts.  Click on the red “Basic Estate Planning (15 Parts)” heading below and then click “Play All” under “Basic Estate Planning” at the top of the YouTube page.

Basic Estate Planning (15 Parts)

We describe each of the parts below with an individual link to each one. If the full screen button on the bottom right of the icon is not working, click on “For Full Screen Click Here.”

Part 1:  Introduction.  Wills and probate property vs. nonprobate property. For a Full Screen Click Here.

  

Part 2: Beneficiaries, mistakes with nonprobate property, trust basics, guardian appointments, life insurance beneficiary designations, and estate taxes. For Full Screen Click Here.

Part 3:  Wills, the estate taxation of life insurance death benefits, tax issues and asset protection issues relating to Wills, and disclaimer Wills. For Full Screen Click Here.

Part 4: Formula marital deduction Wills, exemption trusts, risk of disinheriting the surviving spouse as estate tax exemptions increase, the portable estate tax exemption, and asset protection bypass trusts.  For Full Screen Click Here.

Part 5:  Formula marital deduction Wills (and exemption trusts) vs. disclaimer Wills (and disclaimer trusts), and common estate planning mistakes. For Full Screen Click Here.

Part 6:  Common estate planning mistakes continued, the duties of an Executor, the duties of the Trustee, the duties of a guardian, planning for post-death cash needs, and the generation skipping tax. For Full Screen Click Here.

Part 7: Retirement plan accounts (IRAs, 401(k) plans, 403(b) accounts, etc.), estate taxation on retirement plan accounts, the risk of a circular tax on tax problem at death of account owner, life insurance and irrevocable life insurance trusts as a solution. For Full Screen Click Here.

Part 8: Retirement plan accounts and related income tax issues, effects of beneficiary designations on deferral periods, spouse as beneficiary and tax deferred rollovers, required minimum distributions, and tax treatment of inherited IRAs, and the five year payout rule. For Full Screen Click Here.

Part 9: Revocable living trusts, the living trust as a Will substitute, probate avoidance, planning for incapacity, and establishing a revocable living trust. For Full Screen Click Here.

Part 10:  Comparison of revocable living trust plan with non-living-trust plan, treatment of lifetime issues, powers of attorney as an alternative to the revocable living trust, and what it means to avoid probate. For Full Screen Click Here.

Part 11:  Comparison continued, avoiding ancillary probate in other states where real property is located, creditors’ claims and safe harbors for the Executor, and income and estate taxes. For Full Screen Click Here.

Part 12:  Comparison (continued), accounting requirements, releases from liability, continuing trusts and continuing probate court jurisdiction, reasons for considering revocable living trusts, management during incapacity, and real property in other jurisdictions. For Full Screen Click Here.

Part 13:  Reasons for considering a revocable living trust (continued), controversial estate plans, probate notice requirements, disruption of support for third parties, probate and related delays, simplifying estate settlement for survivors, nonreasons for considering revocable living trusts, the living trust as tax neutral, and probate court fees. For Full Screen Click Here.

Part 14: Gift planning, gift and estate tax exemptions, exclusions for small gifts, gifts to education funds (529 plans), exclusions for qualified tuition and medical costs, gift tax marital deductions,  gifts to U.S. citizen spouse, and gifts to noncitizen spouse. For Full Screen Click Here.

Part 15: Gifts of life insurance policies, incidents of ownership, irrevocable trusts as owner, three year rule relating to transfers of life insurance policies, and sophisticated gift techniques (qualified personal residence trusts, grantor retained annuity trusts, valuations for gift tax purposes, gifts to charities and charitable trusts). For Full Screen Click Here.

Posted on 3/29/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

     
  Join Email List  
     

Chipman Mazzucco | Promote Your Page Too

Avoiding the Trustee’s Worst Nightmare

September 4, 2011

The Trustee’s worst nightmare is to be cross-examined by a blood thirsty litigator whose sole goal is to make the Trustee look as bad as possible. The Trustee thwarts the litigator’s attacks by paying close attention to the standards of fiduciary conduct that govern the Trustee’s activities and by creating an organized and detailed record of the Trustee’s deliberations and transactions.

The purpose of this post is to describe the steps the new Trustee should take to get started on the “right foot.” It is based on a publication by LawFirst Publishing entitled “The Trustee’s Guide” and is meant only to provide general guidance. Management of your trusts must take the specific terms of the trusts into account as well as the general principles described in this post.

For previous posts regarding trusts, go here: The Benefits of Trusts and Special Needs Trusts.

A. Background

A settlor (creator of a trust) may form a trust through a will or through a trust instrument. Either way, a trust is a legal device that allows a Trustee, the legal owner of the trust property, to manage the property for the benefit of one or more beneficiaries, the equitable owners of the trust property. The Trustee owes several duties to all the beneficiaries of the trust. Frequently, the beneficiaries of the income are different from the beneficiaries of the principal. This has important ramifications for accounting and investment purposes.

B. Trustee Duties

The Trustee has the duties summarized below:

1. Duty of Loyalty

Except for reasonable compensation for serving as Trustee, a Trustee may not receive a personal benefit from a transaction or decision. The Trustee administers the trust solely in the interest of the beneficiaries. A Trustee may not engage in self-dealing without court approval.

2. Duty to Deal Impartially with Beneficiaries

The Trustee has a duty to treat all beneficiaries impartially except when the terms of the trust provide otherwise. Accordingly, the Trustee should be even-handed in the Trustee’s dealings with all the beneficiaries.

3. Duty to Take Possession and Control of Trust Property

If trust property is in the possession and control of a third party, the Trustee has a duty to take necessary steps to take possession and control.

4. Duty to Keep Trust Property Separated

The Trustee has a duty to keep trust property separate from other property. The Trustee is prohibited from commingling trust property with the Trustee’s own property.

5. Duty to Preserve the Trust Property

The Trustee has a duty to protect the trust property from loss or damage. This will take different forms with different assets: insurance coverage for real and tangible property; safe deposit boxes and custodian arrangements for securities; and climate control for paintings, etc. The Trustee should not engage in speculative investing.

6. Duty to Make Trust Property Productive

The Trustee has a duty to convert unproductive property to productive property unless the terms of the document provide otherwise.

7. Duty to Pay Income to the Income Beneficiary

Unless the terms of the trust provide otherwise (and they frequently do), the Trustee has a duty to distribute income to the trust beneficiaries in reasonable intervals during the term of the trust.

8. Duty to Keep and Render Accounts

The Trustee has a duty to keep clear and accurate accounts showing in detail the nature and value of all the trust property and how the property has been administered.  Go here for a sample of a Trustee’s account:  Sample Trustee’s Account.

9. Duty to Furnish Information

The Trustee has a duty to satisfy a beneficiary’s reasonable requests for information. See Section F.2. below.

10. Duty to Exercise Reasonable Care and Skill

The Trustee has a duty to exercise the same skill and care that someone with ordinary prudence would exercise with respect to his or her own property. In addition, pursuant to Connecticut law, when investing and managing trust property, the Trustee has a duty to do so in accordance with the “prudent investor standard” as defined in the Connecticut Uniform Prudent Investor Act starting at Section 45a-451 of the Connecticut General Statutes (copy attached). Pursuant to New York law, when investing and managing trust property, the Trustee has a duty to do so in accordance with the “prudent investor standard” as defined in Section 11-2.3 of New York’s Estates, Powers and Trust Law (copy attached).

11. Duty Not to Delegate

The Trustee is personally responsible for exercising his or her judgment as Trustee. The Trustee cannot avoid responsibility by delegating such responsibility. With respect to investment management, however, the Trustee who lacks the skill and experience to manage investments is well-advised to retain competent investment professionals.

12. Duty to Enforce Claims

The Trustee has a duty to use reasonable efforts to enforce the trust’s claims.

13. Duty to Defend Actions

The Trustee has a duty to take reasonable steps to defend the trust property against the claims and actions of others.

C. Initial Set Up of Trust

1. Accept or Decline Appointment

Until you accept your appointment as Trustee, you are under no obligation to administer the trust. You may indicate acceptance in writing or by performing acts as Trustee. To decline appointment, you should complete a simple written statement that notifies the court or appropriate person of your intentions. The remainder of this post presumes that you already have accepted or plan to accept your appointment.

2. Gather Documents

To properly administer the trust, you will need to assemble the following documents shortly after accepting your appointment:

i. The trust instrument, which may take the form of an original of the trust agreement, a certified copy of the will, or a certified copy of a court decree establishing the trust.

ii. The following, if provided under a document other than the trust instrument:

a. An original of your written appointment as trustee.

b. An original of the agreement (if any) concerning your compensation as Trustee.

iii. Contact information for each beneficiary, including full names, Social Security numbers, dates of birth, and home and business addresses, telephone numbers, and fax numbers.

iv. Deeds to real property transferred to the trust.

v. If the trust was created by a will:

a. A certified copy of settlor’s death certificate.

b. A copy of the estate’s federal estate tax return, if any.

c. A copy of the Connecticut estate tax return.

d. A copy of the executor’s final accounting if the trust is established pursuant to a Will.

vi. If you are replacing a prior trustee:

a. An original of the resignation or the removal of prior trustee.

b. A copy of prior trustee’s accounting.

Original documents, and other important documents, should be kept in a lockable fireproof file cabinet or safe. If you keep records on your personal computer, be sure to back up frequently. Many of the documents listed above, including the trust instrument, deeds, tax returns, and contracts with agents should be retained permanently. Insurance policies should be held for at least three years after their expiration date, while approved accountings should be retained until the trust terminates and the final distributions have been made to the beneficiaries and approved either by the interested parties or by the Court having jurisdiction.

3. Apply for a Federal Taxpayer Identification Number (TIN) for the Trust

Use IRS Form SS-4, Application for Taxpayer Identification Number. If you are the Trustee of a trust created by a will, you still must apply for a TIN even though the estate already has its own TIN.

4. Notify the IRS of Your Position as Trustee

Use IRS Form 56, Notice Concerning Fiduciary Relationship. This form notifies the IRS that you are the Trustee and should be receiving communications relating to the trust. At your discretion, you may also file Form 56 with your first federal tax return for the trust. If you are replacing a prior Trustee, it is essential to file Form 56 in a timely manner so that the IRS can direct communications about any prior delinquencies to you. You should file Form 56 again at the end of your term as Trustee to inform the IRS that the trust relationship has ended.

5. Obtain a Bond if Required

A bond protects the trust in the event that you are unable to make good any losses from your negligence, breach of fiduciary duty or criminal acts. Connecticut and New York laws require Trustees of trusts created by a will to obtain a bond, unless the Will waives this requirement.

The bond will not protect the Trustee against personal loss from a breach (negligent or otherwise) of one of the Trustee’s many duties. Individual Trustees will find it difficult to insure against such loss through a fiduciary liability policy because insurers consider non-professional Trustees to be a high risk.

You can decrease your personal exposure by delegating duties to attorneys, investment managers, tax consultants, and others who qualify for professional liability coverage.

6. Create an Investment Policy Statement

An investment policy statement is a written policy that governs the investment process. While not required, we recommend creating one because it can help you explain to beneficiaries or a court that you constructed and followed a suitable investment program.

Although your investment policy statement must conform to the terms of the trust, you have great flexibility in crafting it. At a minimum, it should cover:

i. Goals and objectives.

ii. Time frames.

iii. Acceptable levels of risk.

iv. Liquidity and income needs of beneficiaries.

v. Types of investments.

vi. Asset allocation strategy.

vii. Selection and monitoring of financial advisors.

viii. Procedures for amendment and review of your investment policy.

7. Meet with the Beneficiaries

As soon as is practicable, you should meet with the beneficiaries. A typical meeting should include a discussion of:

i. The terms of the trust, including any restrictions on investment.

ii. The duties of a Trustee.

iii. Fees and other expenses of the trust.

iv. Tax consequences for the trust and the beneficiaries.

v. Beneficiaries’ preferences for communication.

Additionally, there are a few simple things which you may wish to do to make the meeting run smoothly and to avoid misunderstandings. Consider providing each beneficiary with an agenda, an accordion-type folder containing pre-labeled folders for correspondence, statements, copies of documents, and tax information to ensure that they have easy access to all documentation, and a summary of the meeting in a follow-up letter.

D. Managing Trust Income and Principal

Assuming a the trust is either a Connecticut or New York trust, unless the terms of the trust provide otherwise, all Trustees must adhere to the applicable Prudent Investor Act (see the Connecticut Uniform Prudent Investor Act and the New York Prudent Investor Act). Under such acts, Trustees owe the beneficiaries several duties, including the duty to review the trust assets shortly after receiving them to ensure that they comply with the terms of the applicable Act, to invest the trust assets as a prudent investor would, to diversify investments, to act impartially towards beneficiaries, to consider only the interests of the beneficiaries when investing, and to incur only reasonable investment costs. It sets forth specific factors that Trustees must consider when managing trust assets. Actual return on investments is irrelevant; you are only liable to the beneficiaries for failure to follow the standards of conduct set forth in the Act. An Investment Policy Statement, described above, will aid greatly in compliance with the Act.

Trustees also must adhere to the applicable Principal and Income Act. This Act determines which disbursements the Trustee shall make from income and which from principal.

New York’s Act and Connecticut’s Act are quite different in some important respects. For example, in Connecticut, one-half of the Trustee’s compensation and all of the administrative expenses must be paid from income, while estate taxes and payments on the principal of a trust debt must be paid from principal. In New York, one-third of the regular fees of persons providing investment advisory or custodial services and all of the ordinary expenses relating to administration, management or preservation of trust property must be paid from income, while estate taxes and payments on the principal of a trust debt must be paid from principal. Each of the Connecticut Act and the New York Act has several exceptions and different rules for different types of assets, so it is best for you to obtain proper guidance specific to your situation.

E. Distributions

Distributions take the form of required and discretionary distributions. Required distributions are relatively easy to manage: the trust instrument will specify regularly scheduled distributions or distributions after the happening of an event (such as a beneficiary attaining a certain age). Your power to make discretionary distributions is spelled out in the trust instrument. Whether you are responding to a request from a beneficiary or initiating the distribution on your own, you should document the purpose of the distribution, the source of income, and the possible adverse effects on other beneficiaries.

F. Filing Requirements

1. To the Probate Court

a. Inventory

In Connecticut, if the trust is established pursuant to a decedent’s Will, you will need to file an inventory with the Probate Court having jurisdiction over the settlement of the decedent’s estate. An inventory of trust assets includes a description of the trust property, the date received, its adjusted cost basis, and its market value on the date it legally became trust property. You may wish to list assets by category, such as cash, fixed income, common stock, and real estate.

b. Accounting

In Connecticut, if you are the Trustee of a trust created by a Will, you must file an accounting with the Probate Court every three years (unless the will excuses these filings). For other trusts, except for the final accounting, you need only file an accounting with the Probate Court when a beneficiary requests one. In Connecticut, all Trustees of trusts established pursuant to a decedent’s Will must file a final accounting with the Probate Court when the trust terminates. An accounting provides all interested parties with complete transaction information regarding the contents of the trust, including all receipts and disbursements.  For a sample of a Trustee’s account, go here:  Sample Trustee’s Account.

2. To the Beneficiaries

You have a duty as Trustee to provide a beneficiary with information the beneficiary reasonably requests about the nature and value of the trust property and information needed to enforce the beneficiary’s rights under the terms of the trust. The Trustee is required to satisfy only those requests that are reasonable based on the circumstances.

The terms of the trust frequently include instructions to the Trustee regarding periodic reporting to the beneficiaries of the trust. The Trustee has a duty to follow such instructions.

3. Tax Returns and Taxes

a. On Behalf of the Trust

Trust income is subject to taxation. The Trustee is responsible for filing federal and State income tax returns on a calendar year basis. The Trustee is also responsible for making estimated tax payments.

Keep in mind that the maximum tax bracket for trusts (35%) applies when a trust’s taxable income exceeds a mere $11,200. When computing the taxable income of a trust, the trust is entitled to deductions related to income distributions from the trust. A beneficiary who receives income distributions from a trust is required to report such income on the beneficiary’s income tax return. The Trustee is required to provide this information to the beneficiary and the tax authorities as part of the income tax returns which the Trustee must file.

Tax laws are complex and change frequently. A Trustee who lacks skill and experience in fiduciary income tax matters should retain the services of a tax professional.

b. On Your Own Behalf as Trustee

For tax purposes, a Trustee is a self-employed individual. Therefore, you will have to file Schedule C, Profit or Loss from a Business, with your federal income tax return Form 1040. If you already file Schedule C for a different business, you will need to file a separate Schedule C for your activities as Trustee.

Trustee fees are earned income and as such, they may change your tax bracket or affect your eligibility for Social Security benefits. If your net profit on Schedule C exceeds $400, you will have to file Schedule SE, Self Employment Tax. If you show a net loss on Schedule C, you may be able to offset other income on Form 1040. Again, we recommend that you consult with a tax advisor regarding these issues.

Posted on 9/4/2011 by Richard S. Land, Member,  Chipman, Mazzucco, Land & Pennarola, LLC.

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