With proper planning, a married couple can combine their two exemptions to protect double the amount of assets from estate taxes than a single person can protect.  Saving on estate taxes helps your family preserve more assets for the next generation.  

A disclaimer trust plan allows a married couple to leave all assets outright to the surviving spouse, but at the same time, it gives the spouse the option to minimize estate taxes.  Essentially, it creates a safety net when a couple is not certain whether their combined net worth will exceed a single person’s estate tax exemption. 

 What is the current estate tax exemption level?  A well-considered plan evaluates not only the federal estate tax exemption, but the exemptions of all states where the couple lives or owns property.  As of January 1, 2021, the federal estate tax exemption increased to $11.7 million on January 1, 2021.  Therefore, many couples do not have to worry about federal estate taxes under the existing laws (this could soon change).  However, many states have much lower estate tax exemptions.  Currently, 17 states and the District of Columbia impose an estate or inheritance tax, all with varying exemption levels.  For example, Massachusetts has a $1 million exemption.  Connecticut has $7.1 million exemption (as of January 1, 2021).  Exemption levels may change in the future due to scheduled increases, cost of living increases, or changes in tax laws. 

A disclaimer trust plan is commonly used for a married couple who currently have estate tax concerns but expects that to change in the future.  Changes might happen because of a scheduled increase in the estate tax exemption.  A change could also happen because the couple expects their asset level to decrease because of retirement spending.  Some couples expect a change because they plan to move to another state with a higher estate tax exemption or no estate tax at all.  An expected increase in assets from the sale of a business or success with investments may also prompt a couple to change from a simple Will to a disclaimer trust plan. 

      How does a disclaimer trust plan work?  Each spouse leaves assets outright to the surviving spouse, with a contingent distribution to a Disclaimer Trust if the surviving spouse disclaims the inheritance.  A “disclaimer” is a renunciation of a bequest.   This disclaimer option gives the surviving spouse the opportunity to consult with an estate tax planner and determine whether tax planning is beneficial at that time.  If tax planning is not deemed necessary at the time, then the surviving spouse takes the inheritance free of trust.  If it is deemed necessary, the surviving spouse signs a document disclaiming certain assets into the Disclaimer Trust.  Any disclaimed assets including appreciation in the value of those assets will not be subject to estate tax upon the surviving spouse’s death.  

      The Disclaimer Trust still gives the surviving spouse a great deal of control over the disclaimed assets.  The surviving spouse is the beneficiary of the Disclaimer Trust.  Typically, the surviving spouse is also the Trustee of the Disclaimer Trust.  The trust can be structured so all the income of the Trust goes to the surviving spouse in at least quarterly installments.  Upon the surviving spouse’s request, the Trustee must also pay the surviving spouse so much of the principal of the trust as the Trustee deems appropriate for the health, support and maintenance in accustomed manner of living of the surviving spouse.

      To create the Disclaimer Trust, you must exercise your right to disclaim some or all the property from your spouse’s taxable estate within 9 months of your spouse’s death.  You cannot take dividends or other benefits from investments that you will disclaim.  To exercise this right, you must transfer the disclaimed property to the Disclaimer Trust.  Therefore, it is vital to consult with an estate planning attorney soon after the death of the first spouse to die. 

      A disclaimer trust plan allows a surviving spouse to decide after the death of their partner whether to keep an inheritance outright or disclaim part of it into a trust for tax planning benefits. This flexibility means that if tax savings are not needed, the inheritance can be taken free of trust, but if they are, disclaimed assets can be transferred into the trust, protecting their future value from estate tax. The surviving spouse typically remains both the trustee and the primary beneficiary, ensuring continued access to income and, when necessary, principal for health, support, and maintenance. Because disclaimers must be executed within nine months and require careful handling to avoid disqualifying actions, consulting an estate planning attorney promptly is essential, much like one would seek trusted information about Vidalista and men's health to make informed, responsible choices. This structure balances tax efficiency with ongoing financial security for the surviving spouse. 

February 2021, Issue #30

Mark Pancrazio and Jack Reardon wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney.

In Goytizolo vs. Moore, Trudy Moore (hereinafter, “Trudy”) bought a Southbury property in 1955.  Two months later, Trudy conveyed this property to her mother in trust for Trudy’s minor daughter, Lynn.  Trudy did not prepare a separate trust agreement. 

On June 29, 1973, Trudy’s mother conveyed this same property back to Trudy “in trust for” Lynn.  In this deed, however, Trudy’s mother reserved a life use in the property which permitted her to remain on the property for the rest of her life.  So, as of June 29, 1973, Trudy held title to the property as trustee for her daughter, Lynn.

Trudy and Lynn had a falling out.  On August 12, 1987, Trudy conveyed this property as trustee to her husband, Jesse.  Immediately thereafter, Jesse conveyed the property back to Trudy without mentioning the trust for Lynn in the deed of conveyance.  Lynn, now an adult, a married woman by the name of Lynn Goytizolo, brought an action in the Superior Court claiming that the strawman deeds from Trudy to Jesse,  and from Jesse back to Trudy, were null and void.

The Superior Court determined that the basic elements of a “dry” trust existed in the deed from August of 1955 when Trudy conveyed the property to her mother in trust for Lynn.  In reaching its conclusion, the Superior Court noted that Trudy had consistently stated to Lynn over many years, that the property belonged to her; that in 1955 Trudy conveyed the property “in trust” so that her daughter would have security; that until the 1987 conveyance, Trudy had affirmed that this property was held in trust for her daughter; that Trudy testified at trial that she executed the 1955 deed because at the time, she was driving without insurance and could lose the property if she was sued; and that for several years before 1987, Lynn and her husband made repairs to the property costing $40,000 to $50,000. 

Having determined that a trust existed, the Superior Court voided both 1987 deeds and ordered Trudy to convey the property to Lynn.  On appeal, the Connecticut Appellate Court opined that a trust required three basic elements.  First, there must be a trust “res.”  In other words, there must be some property that is the subject of the trust.  Second, there must be a fiduciary relationship between a trustee and a beneficiary that requires the trustee to deal with the res for the beneficiary’s benefit. Last, there must be a manifestation of an intent to create a trust.  Trusts in which no trustee’s duties are considered to be active are “dry” or passive trusts, but they are valid, legal trusts, nonetheless. 

Having found that a trust existed, the Court then had to decide whether Trudy had the right to revoke that trust when she executed the 1987 deed.  The Court made several findings.  First, the Court noted that when Trudy married Jesse, she became insured under his auto liability policy in 1962.  She remained insured from that point until 1987 when she conveyed this property to her husband.  Although she was insured for that 25-year period, there was no evidence that she intended to revoke the trust.  In addition, there was no express reservation of the right to revoke the trust written into the 1955 deed.  In fact, the Court found that Trudy hired a lawyer to draft that deed for her.  Thus, the Court determined that Trudy could not revoke the trust.

This case demonstrates the ambiguity that can be created when trust language is incorporated into a deed of conveyance.  The better practice would have been to create a separate trust agreement and then convey the   The situation would have been much clearer and, undoubtedly, litigation could have been avoided.  In addition, a mother/daughter relationship might have been preserved.  At Cipparone & Zaccaro, we exercise extreme caution when drafting both trusts and deeds of conveyance.  If you would like to talk to us about preparing your estate plan and protecting your real estate assets in the most prudent way, please do not hesitate to give us a call.  

The Court’s decision in this case highlights how the absence of clear language in a deed can lead to disputes about the revocability of a trust, as seen when Trudy’s conveyance of property did not expressly revoke the trust created decades earlier. Because the original 1955 deed lacked any reservation of rights and was prepared by legal counsel, the Court concluded that her later actions were insufficient to nullify the trust. This outcome illustrates the importance of drafting separate and unambiguous trust agreements rather than embedding trust provisions in deeds, which can create long-lasting uncertainty and even damage family relationships. Just as clarity and professional guidance are essential in estate planning, individuals facing complex health or medication questions—such as consulting a neurologist about Neurontin use—benefit from expert advice that ensures decisions are both legally and personally sound. Careful planning at the outset can minimize future conflict, protect relationships, and provide long-term security for all involved.  

February 2021, Issue # 30 

 Mark Pancrazio and Jack Reardon wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney.

Many times, when we send a Will or Trust to a client, the first question the client asks is “What does ‘per stirpes’ mean?”  The term per stirpes appears with the word “issue” or “descendants.”  Your issue or descendants are your children, grandchildren, great grandchildren, etc.  “Per stirpes” literally means ‘by roots or by representation.”  Under a per stirpes distribution, each deceased member of one generation is represented by his or her descendants of the next succeeding generation.  For example, say a grantor has two children-- a son and a daughter, and leaves a bequest to his or her descendants, per stirpes.  At the time of her death, both children predeceased her.  The predeceased daughter had one child who survived the grantor.  The predeceased son had five children who survived the grantor.  The bequest would be divided into two shares. The predeceased daughter’s child would take one share (50%).  The five children of the predeceased son would divide what would have been the son’s share if he survived the grantor (10% each). 

Contrast per capita distribution with per stirpes distribution.  Per capita distribution is equal distribution among a class of people. Using the same facts, but under a per capita distribution, the 6 grandchildren would all receive equal shares.  The daughter’s child and the son’s five children would all get an equal share (1/6^th each), rather than getting the share that their parent would have received. 

On March 30, 2020, the Connecticut Supreme Court decided which generation serves as the root for a per stirpes distribution.  In Schwerin v. Ratcliffe, the Hubbell family had two trusts that, when they terminated, went to “the grantor’s issue then living, per stirpes.”  The trusts were signed in 1957.  The person who signed the Will (“the grantor”), the grantor’s children, and one of the grandchildren, had died.  One side of the family argued that the balance should go by representation with the children as the root.  The other side of the family argued that the balance should go by representation with the grandchildren as the root.  The latter maintained that the words “then living” modifies issue and because the children had died, the children could no longer serve as the root. 

The Court ruled that in Connecticut, the children serve as the root for purposes of a distribution to the “grantor’s issue then living, per stirpes.”  The court found that the term “issue” indicates that the grantor intended the trust principal to be divided into equal shares on the basis of the number of their children as that was the first generation below the grantor.  The court cited to Connecticut’s intestate statute as a guide.  The intestate statute sets forth what would happen if there is no will.  C.G.S. § 45a-438 refers to the residue after the gift to the spouse going equally to the children and to the legal representatives of the children who may be dead.  Thus, our intestate statute relies on the children serving as the root.

The court noted that the words “then living” in the phrase “the grantor’s issue then living, per stirpes” means that a beneficiary must be alive to take his or her share.  It does not mean that members of that generation must be alive to serve as the root of the per stirpes distribution.  The court ruled that the children could be per stirpal roots, even though they could never receive gifts under the trust.

The court stated that the trusts did not single out the grandchildren as beneficiaries, individually.  Instead, the trusts referred to issue as a whole.  Thus, the court thought it unlikely that the grantor wanted the grandchildren to serve as the root.

The plaintiffs cited New York law in support of their position.  The Court noted that both trusts state that they are governed by Connecticut law, so New York law does not apply.  New York statutes also differ significantly from the Connecticut statutes on per stirpes distribution.  New York law explicitly provides that the number of shares in the initial division of an estate is to be based on the number of issue surviving at the time of distribution.

The Court’s ruling clarified that under Connecticut law, the term “issue then living, per stirpes” directs distribution through the children of the grantor as the per stirpal roots, even if those children are no longer alive to receive gifts themselves. By aligning its interpretation with the state’s intestate statute, the Court emphasized that grandchildren were not intended to serve as the initial roots of distribution unless specifically named, distinguishing Connecticut’s approach from New York law, which bases the division on the number of surviving issue at the time of distribution. This highlights the importance of precise legal language in trusts, as subtle differences can dramatically alter outcomes for beneficiaries and create disputes among family members. Just as clarity in estate planning avoids confusion, accurate resources—such as Cialis information for men's health—help individuals make better-informed decisions in other sensitive areas of life where both legal and personal consequences may be significant.

November 2020, Issue #29

Family members who weather this pandemic may consider making a low interest loan to family members with fewer resources.  Intrafamily loans have many advantages.  The minimum interest rate required by the IRS on intrafamily loans is lower than commercially available rates.  The November 2020 IRS rate for a short-term loan (less than 3 years) is only 0.13%!  A family lender will require much less disclosure (if any) or collateral than a commercial lender.  If the borrower uses loaned funds for an investment and the investment appreciates at a rate greater than the loan interest rate, the excess appreciation remains with the borrower at no gift tax cost. 

Loan proceeds can come from an individual’s funds or from a trust.  For instance, if the borrower or the family has a trust, the family may want to make the loan from the trust, rather than from personal funds.  Unlike a personal loan, though, a trustee owes fiduciary duties to all trust beneficiaries, including managing trust assets with prudence and impartiality.  Only if the trust document allows loans to beneficiaries can the Trustee make a loan to a beneficiary.  For trusts signed after January 1, 2020, the Connecticut Uniform Trust Code C.G.S. §45a-499nnn(18) allows loans out of trust property to beneficiaries on terms and conditions the Trustee considers to be fair and reasonable.  The trustee retains a lien on future distributions for repayment of the loan. 

Whomever makes the loan, an individual or a trust, the lender must consider the ability of the borrower to repay the loan.  If the borrower does not have the income to repay the loan, the individual lender may regret making the loan.  The Trustee, as lender, may worry about a breach of fiduciary duty because the loan will reduce the trust’s assets and could upset other beneficiaries on the grounds of fairness.  Certainly, taking collateral for the loan could reduce the chance of loss on the loan.  

The loan must not look like a gift or a trust distribution.  The goal is to make the loan appear as an investment.  Thus, a loan should be approached like any other investment. 

If the loan is not properly secured or bears below-market interest, the loan may breach a trustee’s fiduciary duty.  The Trustee should disclose the loan to all beneficiaries.  An individual lender may consider disclosing the loan to all family members who may be affected if the loan goes unpaid. Best of all would be to get a written letter waiving objection from the affected beneficiaries or family members.

Proper documentation of the loan can avoid misunderstandings and disputes.  The family borrower should sign a promissory note.  If real estate is taken as collateral for the loan, the borrower should sign a mortgage.  If the borrower pledges business assets as collateral, the borrower should sign a security agreement and a UCC financing statement.  The lender should file the UCC financing statement with the Connecticut Secretary of State’s Office.  If the borrower expects an inheritance, consider making the maturity date of the loan the earlier of the loan term or the death of the person who will provide the inheritance.

The lender must determine the appropriate interest rate.  Internal Revenue Code Section 7872 imposes a minimum interest rate called the Applicable Federal Rate (AFR).  AFRs are set every month and depend on the term of the loan.  The November 2020 AFR for a loan of 10 years or more is 1.17%; the November 2020 AFR for a loan more than 3 years but less than 10 years is only 0.39%. A term loan has a fixed rate for the term of the loan, thus making for a more desirable type of loan than demand loans.  The minimum AFR rules apply to loans by trusts as well as by individuals.  If the interest rate charged on a loan is below the AFR for the loan, the IRS will charge the interest to the lender and impose tax on the interest at the lender’s tax rate.  

Charging a higher interest rate than the minimum AFR may make sense if the lender must consider fairness to other family members or to other trust beneficiaries.  For instance, a home loan might bear interest at the 30-year fixed mortgage rate (about 3%), or a business loan might bear interest at the current rate charged by local commercial banks (about 7%).  If the lender seeks to preserve invested assets, the going corporate bond rate (about 2.3%) may make sense. 

The lender must also determine how to structure the loan.  Ideally, the loan amount plus interest will be amortized over the life of the loan.  Loan amortization websites like https://www.amortization-calc.com/ make this task easy.  For a start-up business loan, the family lender may allow interest only payments for a few years and start the amortization after the initial term has passed.

Intrafamily loans can provide funds to family members who need it most.  Providing a loan instead of a gift can preserve self-respect for a family member borrower during a tough time.  If you or a family member need assistance in documenting a family loan, give the estate planning attorneys at Cipparone & Zaccaro, PC a call.   

November 2020, Issue #29

Jack Reardon and Joe Cipparone were recognized by their peers to be featured in the 27th Edition of The Best Lawyers in America© They received this recognition for the high caliber of their work in Trusts and Estates. With this distinction, they now rank among the top 5 percent of private practice attorneys nationwide, as determined purely by their peers.

Inclusion in Best Lawyers is based on a rigorous peer-review survey comprising more than 9.4 million confidential evaluations by top attorneys. Since 1981, Best Lawyers has utilized a transparent methodology: The best lawyers know who the best lawyers are. No fee or payment to participate is allowed.

Both the profession and the public regard Best Lawyers as one of the most credible measures of legal integrity and distinction in the United States. As such, recognition by Best Lawyers symbolizes excellence in practice.  Congratulations!

November 2020, Issue #29 

During this pandemic, we realize some of our clients want to meet in our office with masks and some would prefer to meet through Zoom or merely by telephone.  We can accommodate any location for interacting.    

Clients continue to be able to sign documents remotely.  You just need to be able to send the documents to us electronically after signing.  We have some clients using scanners and emails, apps on their phones, fax machines, or a nearby office store to send us documents electronically.  

      Don’t hesitate to contact us during this crisis!

July 2020 #28

Joe Cipparone wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney.

Given that summer is here, planning for the future of your family vacation home seems appropriate.  A cottage can represent a significant portion of a family’s wealth and history.  If purchased many decades ago, it has likely appreciated in value many times over.  Children may have grown up spending their summers on the beach or lake and have strong emotional ties to it.  But a family cottage has considerable expenses associated with it, including taxes, insurance, and repairs.  What will happen when the parents are gone?  Will each child be willing and able to share it equally?

Understandably, parents want to treat their children equally.  To keep things simple, they usually just leave the beach house outright to their children.  We often hear, “They will work it out, don’t worry.”   What many families do not understand, is that a family cottage can be a legal nightmare.  Every owner has a legal right to seek partition of the real estate.  A partition suit asks a judge to either physically divide the property or sell the property and divide the proceeds.  With a vacation home, a judge will usually order a sale and divide the proceeds.  When parents give the beach house to the children outright, they risk a partition sale. 

Why might a partition sale occur?   A child might get a divorce, the ex-spouse receives a share of the beach house in the divorce decree, and then the ex-spouse seeks a partition sale.  A child might incur debt for a business or lifestyle, default on the loan obligations and/or file bankruptcy, have his or her share of the beach house liened, then the creditor or a bankruptcy trustee ask for a partition sale.  Even more common, a child might move away for work, or love, and then seldom visits the beach house.   He or she might be unable or unwilling to share in the beach house expenses.  The other children might not wish to buy out his or her share.  Eventually, the faraway child files suit seeking a partition sale.  The child justifies the sale as simply claiming a fair share of his or her parent’s estate.

Even if a partition sale does not occur, the beach house could cause a major rift in the family.  Sometimes a child cannot afford to share in the beach house expenses.  The other children rightfully think that it is unfair that they must bear the burden of carrying the beach house.  The resentment can grow over the years and lead to a permanent rift between them.

How do you avoid this predicament?  You could give the cottage to one child.  But how do you choose which one?  Should you base the decision on ability to bear the expenses, the frequency of use of the beach house, or the amount of assistance a child might be providing to the parents?  Most parents prefer not to choose among their children because they believe it will cause long-term resentment in the family.  

There is a better way.  This solution can preserve family relationships, treat all children equally, and avoid a partition suit.  It involves transferring the cottage while you are alive, or after your death, to a limited liability company (LLC).  In the LLC operating agreement, the children waive their partition rights.  The agreement clarifies the method for sharing expenses.  The agreement can allow the family to restrict use, impose a fine, reduce the ownership share, or buy out a child who no longer is able or willing to share in the property’s expenses.  It can give a child, who has moved away, the option of requiring the family to buy out his or her share.   Such buy out options are usually for less than fair market value and allow payment over a series of years.  The agreement will restrict who can become an owner of the cottage so that the family does not have to worry about creditors or ex-spouses.  The family could avoid the problem of multiplying heirs (and hence, owners) by allowing voting and transfer of shares by family branch, instead of individually.  The agreement can give the children the right to maintain and improve the beach house and compel contributions for such improvements. The family could control the use of the cottage through the agreement so that one child (or the child’s guest) does not monopolize the use of the cottage.  The agreement can also provide compensation to a child who lives near the beach house and bears a disproportionate burden of maintaining and renting the house.

There is a wonderful book on this topic entitled “Saving the Family Cottage: Guide to Succession Planning for Cottage, Cabin, Camp or Vacation Home.” Stuart and Rose Hollander and David Fry wrote this seminal work and are on their 5^th edition.  You can find it at any online bookstore.  It is easy to read and makes the whole topic understandable.  Give it a read and visit us at Cipparone & Zaccaro, P.C.  We have many years of experience specializing in helping families create LLCs to manage and save the family cottage.  We can help you create a wise succession plan.

One of the most effective ways to preserve family harmony and ensure the fair use of a vacation property is to transfer ownership into a limited liability company and clearly outline rights and responsibilities in its operating agreement. Such an arrangement allows families to prevent partition disputes, establish fair expense-sharing rules, create buyout provisions for members who can no longer participate, and even limit ownership transfers to protect against outside claims from creditors or former spouses. By anticipating challenges, like unequal contributions to maintenance or disagreements over usage, families can avoid future conflict and secure the property for generations. Just as thoughtful planning in this context provides long-term benefits, practical resources—such as Tretinoin cream pricing and savings tips demonstrate how clear guidance in other areas of life can reduce stress and help people make well-informed, cost-effective decisions.

July 2020, Issue # 28 

 Joe Cipparone wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney.

The SECURE Act dramatically changed the required minimum distribution (RMD) rules for non-spouse beneficiaries who inherit retirement plans.  Most non-spouse beneficiaries must take their inherited benefits over 10 years. 

Congress recognized that this new rule could create a hardship for special needs beneficiaries.  The SECURE Act created an exception for disabled and chronically ill beneficiaries.  The disabled and chronically ill can take distributions over their life expectancy.  Yet, a special needs beneficiary might want a Supplemental Needs Trust (SNT) to assure that the beneficiary does not lose Medicaid or Supplemental Security Income (SSI). 

Consequently, Congress created a new trust under Internal Revenue Code Section 401(a)(9)(H)(iv) and (v).  The new trust is called an Applicable Multi-Beneficiary Trust (AMBT).  The AMBT must have only individual beneficiaries or trusts for them.  By December 31^st of the year following the death of the retirement plan owner, the trust must be divided between the special needs beneficiary and the other beneficiaries.  The other beneficiaries (usually siblings of the special needs beneficiary) can receive their shares either outright or in trust. Only the disabled or chronically ill beneficiary may have an interest in the portion distributed to the SNT. The SNT will allow the Trustee to make withdrawals from the inherited IRA, payable to the Trust.  The Trustee is not required to immediately distribute the IRA withdrawal to the special needs beneficiary.  Consequently, it is not treated as an available asset for Medicaid or SSI purposes. 

An AMBT works well with a family who has adult children, one of whom is a special needs beneficiary.  The SNT receives IRA withdrawals over the special needs beneficiary’s life expectancy, and the other children receive their distributions over 10 years.  It now means that a retirement plan owner can designate his or her Revocable Trust as the beneficiary of his or her retirement plan.  The retirement plan distributions will be more valuable to the special needs child so the Trustee will want to allocate more retirement plan assets to the special needs child and distribute non-retirement assets to the other children.  Many more families will need financial planning to make good decisions about the allocation of both retirement and non-retirement assets among family members.

For families with young children, an AMBT might not work as well.  Suppose Jennifer has 3 young children, one of whom has special needs.  Jennifer will want those of her children, who do not have special needs, to be able to take distributions over their life expectancies until the age of 18, as allowed under the retirement plan regulations.  To do so, she will want them to have Conduit Trusts – trusts that requires the Trustee to distribute, to or for the benefit of the child, all withdrawals from a retirement plan.  After they reach the age of 18, the Trustee of the Conduit Trust must then take retirement plan withdrawals over 10 years. 

Rather than naming her Revocable Trust as the beneficiary of her retirement plan, Jennifer should name each subtrust as a beneficiary on the beneficiary designation form.  She will name each conduit trust as beneficiary and the SNT as a beneficiary.  Each trust will have its own tax identification number after Jennifer’s death, and the retirement plan administrator will divide the inherited IRA into three separate IRAs.  The Trustee will not have the power to favor the special needs child in allocating between retirement and non-retirement assets. 

July 2020, Issue # 28

Joe Cipparone wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney. 

        On March 27, 2020, Congress enacted and the President signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act, Public Law No. 116-136). As a part of the coronavirus relief, the IRS announced in Notice 2020-18 an extension of tax filing deadlines. Many federal income tax laws have changed because of the coronavirus crisis.  Those new provisions include:

   ·        2019 individual income tax returns and payment of any taxes due are extended to July 15, 2020. The IRS also extended 2020 estimated tax payments and self-employment taxes to July 15.  Gift tax returns but not estate tax returns are also extended to July 15. The extensions are automatic to July 15. You must file an extension to file a return by October 15.   

 ·        No required minimum distributions from retirement plans or IRAs are required for 2020. If a required minimum distribution was already made, we expect that plan participants have 60 days to return the distribution. If you want to make a retirement contribution for 2019, you have until July 15 to make the contribution. You also have until July 15 to fund your health savings account for 2019.

  ·    The IRS will send economic impact payments to eligible individuals in the amount of $1,200 for single returns and $2,400 for joint returns. The payment increases by $500 for each child.  To be eligible, you need a social security number and cannot be claimed as a dependent on another’s return. Adjusted gross income must be less than $75,000 for individuals and $150,000 for couples.  Above those limits, the rebate phases out by 5% so that it completely phases out at $99,000 for single taxpayers and at $198,000 for joint taxpayers. The IRS uses 2018 or 2019 returns to determine the amount of the rebate. No action is required by most taxpayers to receive this rebate.

   ·        If you have coronavirus expenses, you can take penalty-free distributions from a retirement plan or IRA up to $100,000 in 2020.  You can pay the income tax due over 3 years or recontribute the amount distributed.  To take these distributions, you, your spouse or your dependents must have a COVID-19 diagnosis or experience adverse financial consequences as a result of being quarantined, furloughed or laid off or being unable to work because of child care.          

   ·        You can take $300 of charitable contributions as a deduction for 2020 even if you take the standard deduction (do not itemize).

   ·        You can make charitable cash contributions without limit in 2020. Normally, you can only deduct no more than 60% of your adjusted gross income.  

   ·        Employers can defer the payment of federal payroll taxes for wages paid between 3/27/20 and 12/31/20. Self-employed individuals can defer the payment of self-employment taxes for compensation during that period.  Half of the deferred amount is not due until 12/31/21 and the other half is not due under 12/31/22. Employers who partially or fully suspend operations because of a Governor’s shutdown order and lose more than 50% of gross receipts can receive a 50% credit on payroll taxes.

 ·        Employers can provide up to $5,250 toward an employee’s college loans in 2020.  The employee does not have to declare the loan payment as compensation on his or her 2020 income tax return.

We anticipate regulatory guidance from the IRS on many of these new laws. We will attend webinars and seminars to learn their many nuances. Let us know if you want to discuss the effects of these new laws on you or your family.

 April 2020, Issue #27

Joe Cipparone wrote the articles in this edition.  No taxpayer can avoid tax penalties based on the advice given in this newsletter.  This information is for general purposes only and does not constitute legal advice.  For specific questions related to your situation, you should consult a qualified estate planning attorney.

        Governor Lamont’s Executive Order 7-H recognizes law firms as essential businesses.  We remain open for business to serve our clients.  Nevertheless, we take precautionary measures to ensure the health and safety of our valued clients, team members, and their families. Some of them include:

(i)   Encouraging teleconferences or video conferences whenever possible. We use Zoom or Teams for video meetings.

(ii)  When meetings are necessary, not shaking hands and engaging in social distancing;

(iii)  Sanitizing our conference room after meetings and washing our hands abundantly.

(iv) Only visiting clients homes or businesses if an emergency arises.

Don’t hesitate to contact us during this crisis!

April 2020, Issue #27