Tax implications liquidating mutual funds

Campfire Estate Planning Chat Newsletter Word Template Single Spaced Times Roman New 10 point bold MONTH YEAR: Lead Article: 1 ¾ pages [2nd page about 45 lines] [Category: Lead Article Title: Things to think about Summary: Summer at the beach, barbeques, flying kites and S’mores.

What you need to keep the young ones smiling is some good estate planning chatter.

Might a disgruntled beneficiary argue that merely administering the trust you have, without addressing the potential for modifying that trust, isn’t sufficient? ■ Aging: Alzheimer's affects 47 percent of those over 85. Addressing the issues of an aging are critical for many.

How will the cost and complexity of trust administration change if you as a trustee cannot assume that the governing instrument can be relied upon as the governing instrument? Taxes, while unquestionably an exciting cocktail party topic, are just not as important for many folks as more complex fuzzy personal topics.

■ Basis: Estate planning has taken on a new focus on the search for basis, i.e., maximizing the assets included in your estate (or others you select) so that the tax basis on which gain or loss is increased on death to the fair value of those assets (i.e., capital gains are eliminated).

While there is lots of talk about this how much cost and complexity are you willing to tolerate to accomplish this?

■ DAPTs: With the general demise of the estate tax for most wealthy clients asset protection planning has assumed a more important role in planning.

But now, most wealthy people’s estates are below the ,430,000 (2015) estate tax exemption amount. Absent the IRS regulatory change the IRS could argue that the FLP/LLC interest must be discounted so that the assets in your estate will not receive the same quantum of basis step up.

With a regulation prohibiting discounts your estate might get a bigger basis step up (less capital gains to heirs) at no estate tax cost. ■ Administration: You have to meet regularly with all of your advisers after completing a complex/large transaction in order to properly administer that plan. A few of the myriad of vital steps folks so often get wrong include: missing note payments, missing GRAT or CRT annuity payments, paying fees from the wrong entities/trusts, monitoring defined value mechanisms, not issuing Crummey notices, not monitoring trust termination dates, and more.

Should years in the future you need access to trust funds the trusted person might add you as a beneficiary. This creates interesting planning opportunities, but it might also create a new risk for trustees.

If you’re a trustee of an irrevocable trust, and the trust agreement is not optimal, in the past it might have been presumed that “it is what it is.” But now, do you have an obligation to use decanting to improve the provisions of the trust?

Tax implications liquidating mutual funds