Take advantage of a new income tax planning opportunity leveraging trusts with key insights from Jonathan Curry-Edwards, CPA, Senior Tax Manager.
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Tax reforms changes to the federal estate and gift tax basic exclusion amount created a planning opportunity using trusts.
Effective January 1st, 2018, the federal estate basic exclusion amount was increased to $11,180,000.00. That’s over $22 million for a married couple. Prior to the increase, individuals used intentionally-defective grantor trusts to transfer assets and continue to pay tax on the income. Now, individuals with estates below the exemption should consider using non-grantor trusts for income tax planning. Establishing multiple non-grantor trusts will help minimize the impact of the cap on state and local tax deductions. It also creates additional business owners for the new 199 cap A pass-through deductions. Trusts with income below $157,500.00 will get the full 20% deduction on qualified business income regardless of meeting the other qualifications.
Your Friedman tax advisor will collaborate with your attorney during the drafting of the trust documents as well as work with you on asset selection and the future tax compliance needs for the new trusts.
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