Trust Checkup

If you’re the owner, trustee or beneficiary of a trust (foreign or domestic) that was established some years ago, it may be time for a trust checkup.
Text by Stacy Wynn | May 17, 2018 | Lifestyle

Domestic Trusts: For 2016, the lifetime estate exclusion is $5,450,000 per taxpayer or $10,900,000 per married couple. Marital estates under this threshold would not be subject to estate tax and those over may need to revisit their estate planning if this has not been done since the lifetime exclusion was materially increased in 2011. Additionally, trusts reach the highest marginal tax rate of 39.6% (43.4% including 3.8% tax on net investment income) at only $12,400 of income vs $466,950 for married couple filing jointly. Consider making annual distributions of trust net income to the beneficiary if they are in a lower tax bracket to reduce overall tax burden. Foreign Trusts: The IRS continues to target undisclosed foreign accounts so ensure that all required informational returns are being filed on an annual basis if you are the owner or beneficiary of a foreign trust. IRS penalties for not reporting a foreign trust can be 5% of trust assets and 35% of distributions. Forms 3520, 3520-A, 8938, 114 may be required.

› Richard Reed, CPA, M. Tax, is a tax principal in the Lancaster & Reed office in Key Biscayne. The Lancaster & Reed tax practice is focused on the U.S. taxation of international transactions, international trusts and international estates; 305.361.1014;

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