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Private Trust

MCF Private Trust White Paper

october 2019


Don’t Get Robbed - Custody of Your Assets Matters

The headlines tell it all. Lawyers misappropriate money from trust accounts, investment advisors create Ponzi schemes, and wellmeaning, but inexperienced trustees, get sued.


FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

october 2019


Powers of Attorney

A power of attorney is an incredibly powerful instrument that all people, regardless of wealth or status, need to consider. Powers of attorney generally fall into two types: healthcare and financial. A power of attorney for healthcare, also called a living will in some instances, directs what medical treatment and life-sustaining measures are to be taken in the event of incapacity of the principal. Advisors rarely deal with healthcare in their professions, but financial powers of attorney are commonly used to substitute another individual to handle financial affairs. However, these documents may present challenges to the advisor dealing with them.

FULL ARTICLE

MCF Private Trust White Paper

september 2019


Directed Trusts: Why Use One?

A trust can be an important step toward fulfilling your family’s financial goals. There are specific advantages to having a trust: continuity of asset management, privacy, tax savings, and more. With the repeal of the rule prohibiting perpetual trusts, often the terms of the trust live on long after the death of the grantor. It’s impossible to control changes in a family’s life or in the tax law, but a trust grantor can choose a trustee that responds to these changes.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

SEPTEMBER 2019


Do You Still Need An Irrevocable Life Insurance Trust?

You may have established an irrevocable life insurance trust (ILIT) as an integral part of your estate plan. An ILIT is a trust that is constructed to primarily hold a life insurance policy (or policies) on the grantor during the grantor’s lifetime. As the name indicates, an ILIT generally cannot be revoked, amended, or modified after it has been drafted and executed. Once the grantor contributes property or life insurance death benefits to the trust, he or she cannot change the terms of the trust or reclaim any of the properties held within without proper consideration.

FULL ARTICLE

MCF Private Trust White Paper

august 2019


Dynasty Trusts: Exempt for Generations

In the 1900s, a handful of industrialists and entrepreneurs had amassed tremendous fortunes. John D. Rockefeller had made his name in oil, Henry Ford in automobiles, Andrew Carnegie in steel. Their estates, in today's dollars, would rival those of Bill Gates and Warren Buffett.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

august 2019


The Importance of Post-Mortem Planning

What is it? 

Post-mortem planning is a concept derived from the inability of estate planners to predict the future. Given how quickly tax laws and circumstances can change, it is unlikely that a planner will be able to anticipate every variable that an executor or trustee will face after your death. Post-mortem planning is the idea that if an estate plan is flexible enough, executors and trustees will be able to utilize tax elections and techniques in a way that will ensure your goals are met, despite changes in law and circumstance. Post-mortem planning allows the estate planner to create a comprehensive estate plan that encompasses the future, without being able to predict it.

FULL ARTICLE


MCF Private Trust White Paper

july 2019


Compelling Behavior: Do Incentive Trusts Work?

In 1999 John Scroggin, a Georgia attorney, and Robert S. Littell, an Atlanta life insurance agent, published a book titled, The Family Incentive Trust Program, and began promoting the idea of provisions in trusts to influence beneficiary behaviors. In choosing whether and how to implement incentive trusts, there are at least five primary issues that need to be addressed.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

july 2019


Installment Sales to Intentionally Defective Grantor Trusts

Estate planning with intentionally defective grantor trusts (IDGTs) is a well established “asset freeze” technique that has numerous advantages, as described below. In this article, we will discuss the features of this technique and how it can be used for your benefit.

FULL ARTICLE


MCF Private Trust White Paper

june 2019


How to Waste Money By "Saving Money"

Little is more wasteful than doing it wrong. The tremendous cost of saving money to do what you should hire a professional to do is a great example. What are the right ways to involve family and hire professionals to get the job done right, in less time, for less money than the average individual can do?

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

june 2019


A Guide to Institutional Trust and Custody Services

In contrast to a personal trust, where the grantor or creator of the trust is an individual or perhaps a family unit, an institutional trust is established by a corporation, partnership, or other commercial enterprise. Nonprofit, tax-exempt organizations and governmental entities often establish trusts as well. As with personal trusts, the relationship between the entity establishing the institutional trust and the trustee is a fiduciary one where the trustee has an obligation to act in the best interests of another. Many individuals who serve in a fiduciary capacity with such an organization are not aware of the liabilities associated with the position. 

FULL ARTICLE

MCF Private Trust White Paper

may 2019


Get F.I.T.! Fundamentals of Fiduciary Income Taxation

Fiduciary Income Taxation is a logistical necessity in the world of estates and trusts and yet not clearly understood by many beyond the tax professions. We will shed light on a few key issues and create awareness of several more issues to promote a keen understanding of the role each team member plays in planning, administration, investment, drafting, and tax preparation, related to Fiduciary Income Taxation.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

may 2019


The Charitable Remainder Trust: A Versatile Tool for the Tax-Savvy Philanthropist

The charitable remainder trust, or CRT, is the last bastion of a bygone era of charitable tax incentives. Some might say the CRT is the final, true charitable tax incentive available to those with the means to utilize it.

The CRT remains one of the most effective ways for a philanthropic-minded grantor to provide an income stream for a beneficiary, while simultaneously providing an income tax break and mitigating the capital-gains impact of appreciated assets. No matter how this type of trust is implemented in an estate plan, it is an enormously important tool.

FULL ARTICLE

MCF Private Trust White Paper

march 2019


Dysfunction Junction: The Real Issue In Estate Planning

For years too much emphasis was placed on taxation in estate planning. Not that tax savings is not important, but it became the issue, rather than keeping the focus on the REAL issue which is family dynamics. Even clients will get this wrong. When we ask a client, “what is your primary goal,” they will sometimes respond “to pay as little tax as possible”, to which we respond, “no problem, I can eliminate your tax burden completely. We will just leave everything to charity.” After a brief silence followed by the client laughing, we see the truth: who we want to leave it to and how is the primary issue, and THEN doing what we want to do in a tax efficient manner becomes second.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

march 2019


Estate Planning and Individual Retirement Accounts

While the concept of an individual retirement account (IRA) seems fairly straightforward, the rules that apply to distributions can be quite complicated. They are even more complex following a person’s death, and the Internal Revenue Service has devoted some of the most complicated rules in the book for inherited IRA distributions. A thoughtful estate plan can avoid the additional burden on your clients’ heirs of having to negotiate this complexity.

FULL ARTICLE

MCF Private Trust White Paper

February 2019


What's Age Got To Do With It?

What’s the “right” age to begin estate planning? Twenty-five? Fifty? Eighty? If you think about it, age isn’t really the most important consideration. Estate planning has more to do with life stages than with age. So, whether you’re 30 or 90, your individual wealth and the loved ones who depend on you are the factors that should drive your planning efforts.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

February 2019


Avoiding Probate

Probate is the court-supervised process of the administration of a deceased’s estate in the county in which the deceased was a resident. A person may die either testate, in which the person has a last will and testament, or intestate, in which a person’s estate is administered under that state’s
laws of intestate succession because there is no will.

FULL ARTICLE

MCF Private Trust White Paper

january 2019


Basis and Income Tax Planning for the Estate Plan

Since 2011 we have been in a world of record high estate tax exemptions. As a result, less than two tenths of one percent of the population is subject to estate tax. Naturally, as tax law changes, so do strategies. The bad news is the right strategy depends very much upon the individual situation. 

Background; Estate Planning: The old paradigm was with success came an estate tax of over half one’s wealth. Limitations of $600,000 estate tax free and rates cresting at 55% created a mindset of gifting non-essential assets, particularly those expected to rise in value over one’s life expectancy, out of one’s estate. After all, the top estate tax rate was almost three times the capital gains tax rate. Contrast that with today’s environment. The estate tax rate about double the capital gains rate and the dollar amount exemptible is significantly higher than what it was just 20 years ago. Naturally estate plans should adjust to the changing environment.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

January 2019


What’s in a Trustee Name?

One of the most consequential decisions in your estate planning is who to name as trustee. The trustee’s level of knowledge, commitment, ability and skill will have an enormous impact on the intended purpose of your trust. Despite the importance of this decision, it is often given less consideration than the structure of your plan or choice of attorney. Even the most well-drafted estate plan will fail to achieve its purpose if the trustee you select fails to carry out his or her role properly. 

What Does a Trustee Do?

FULL ARTICLE

MCF Private Trust White Paper

DECEMBER 2018


How to Choose a Trustee

As you plan for your own and your family’s financial future, you may be considering the creation of a trust. If you decide a trust is needed, either during your lifetime or in your will, you will have to choose a trustee to administer it. 

A trust is a legal arrangement that transfers property to a trustee, who manages it for the benefit of the individuals you name. The law sets high standards that every trustee must meet. You can choose almost anyone to serve as your trustee - a family member, a friend, an accountant or attorney - but the best option is often a corporate fiduciary, such as National Advisors Trust Company (NATC). Naming a corporate fiduciary - alone or jointly with a family member - has several advantages for your beneficiaries, namely continuity and stability.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

december 2018


‘Tis the Season for Charitable Gift Giving

January 2018 ushered in the most comprehensive tax law change in more than 30 years. While there has been a bit of negative buzz about changes in charitable deductions – most notably, a higher standard deduction that translates to fewer itemizers – some of the biggest tax advantages for gifting were left untouched.

Donors that are unable to itemize deductions, including charitable contributions, still have attractive giving options and techniques to consider. As year-end planning begins, below are some philanthropic strategies to consider.

FULL ARTICLE


MCF Private Trust White Paper

NOVEMBER 2018


Asset Protection: The Path to South Dakota

One of the most innovative new estate planning strategies for protecting the assets of wealthy clients involves the use of self settled trusts with trust administration in South Dakota. This growing trend for South Dakota asset protection strategies helps high net worth individuals mitigate the risk to their wealth without going offshore.

Asset protection is a set of legal techniques and a body of statutory and common laws aimed to protect the assets of individuals. The goal of asset protection planning is to insulate assets from claims of creditors without concealment or tax evasion.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

november 2018


Getting Advice During a Life-Changing Illness

The aging of America, combined with advances in medicine, is having the anomalous result of people who are living longer with chronic and sometimes terminal illnesses. People are living longer, but with diseases that might have killed them 40 years ago.

While health situations may change suddenly and dramatically, the counsel you or your loved ones receive during these times should be steadfast and mindful. Financial advisors can aid in at least two ways: First, provide guidance with respect to the financial needs that are the inevitable result of the transition from good health to chronic illness; and second, provide emotional support for physical, mental, and emotional changes that may occur.

FULL ARTICLE

MCF Private Trust White Paper

october 2018


Show Me The Money: Investing for Different Types of Trusts

 Here we will examine fiduciary investing, its common law rules, expansion or limitation by the document, and changes under state law to glean insights into issues affecting the investment decisions, documentation, and areas of liability. Using the Uniform Prudent Investor Act as a guide, we will examine the thought process, considerations, documentation and ongoing review of challenging investment decisions, including, Concentrations, Initial assets, Delegation, and Factors to consider.

Investing is central to the role of a fiduciary. Regulation 9 defines fiduciary roles largely using the investment discretion as the central tenet. Without a fiduciary relationship, investments fall to the transactional, caveat emptor, brokerage model. Neither is better nor worse, but they are decidedly different, and that is the point.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

october 2018


Silence May be Golden

While trusts play an integral part in transferring assets to future generations, they may present a potential problem with confidentiality. 

Consider the case of a father who created a $22 million irrevocable trust for the benefit of his 17-year-old twin daughters. The grantor happened to reside in Oregon, which is a state that has adopted the Uniform Trust Code (UTC), a comprehensive set of laws governing the creation and administration of trusts that has been adopted by more than 30 states. Each state may adopt it as written or with modifications. The UTC requires that the trustee of an irrevocable trust notify qualified beneficiaries of the existence of the trust, furnish them with a copy of the trust document and provide a statement — at least annually – of the trust assets and transactions. Even if the grantor has language in the trust document detailing when the beneficiaries should receive notice and accountings of the trust, that desire is overridden by the UTC.

FULL ARTICLE

MCF Private Trust White Paper

September 2018


Charitable Giving Strategies and Opportunities

People have a number of different reasons for charitable giving. Some give to support their personal values, such as specific interests, others due to concerns about a legacy, and some with a view to philanthropic intent combined with estate planning opportunities. Regardless of the intent, though, charitable giving is a highly personal decision, and your clients should discuss their plans not only with their families and loved ones, but also with their financial, tax, and legal advisors. In this newsletter, we discuss how the recently passed Tax Cuts and Jobs Act (the “Act”) dramatically alters the income tax landscape for your clients’ philanthropic practices, and review two of the last remaining true tax shelters available.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

september 2018


Settling Estates with Trusts – An Overview

There are a myriad of reasons a trust is a practical estate planning tool. For many clients, a resounding reason is avoiding probate in the process of distributing assets after the grantor’s death. While probate could be considered a useful alternative in unique cases or in certain jurisdictions, a trust commonly offers a high degree of privacy with quicker execution at lower costs. In addition, rather than having only an Attorney-In-Fact under a Power of Attorney possess the authority to immediately deal with financial issues when the grantor becomes incapacitated, which can often be problematic, a trustee has the full authority, at the instant of incapacity, to manage the assets in a trust.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

August 2018


The Real (and Often Overlooked) Estate Planning Issues

What is your primary goal with estate planning? When asked, you may answer with this: “To pay as little tax as possible.” After the Tax Cuts and Jobs Act of 2017, less than 1 in 10,000 decedents’ estates, or 0.0001%, will owe federal estate taxes. Unless everything is left to charity, taxation should still be addressed, but the emphasis should always be on who your estate plan will benefit and how will it be executed.

While it can be a difficult conversation, your estate planner can help you determine how family dynamics could impact assets left to heirs. When it comes to addressing family dynamics in estate planning, there are three key issues: 1.) The grantor’s desired use of the funds by the heirs; 2.)
The heirs’ ability to comply with those desires; and 3.) Protection from outside threats such as lawsuits, creditors, or divorce.

FULL ARTICLE

MCF Private Trust White Paper

August 2018


Creating and Reviewing ILITs

The irrevocable life insurance trust (ILIT) has been a useful estate planning tool for several generations. However, given the constantly changing tax environment and the developments in both estate planning techniques and insurance products, it is important to periodically review your client’s ILIT to confirm that the rationale for creating the trust is still valid, that the trust as written still meets the needs and expectations of the client, and that the underlying insurance policy is performing in the manner contemplated at purchase. New clients may also have a need for an ILIT that needs to be discussed fully prior to the drafting of the instrument and purchase of the life insurance product. Here are some thoughts to consider in conducting such a review.

FULL ARTICLE

Trust Connection - A Monthly Report on Trust News and Information

JUly 2018


The Number One Mistake People Make in Estate Plans

Estate planning is complex, but the most common mistake is quite simple – coordinating the title of assets with the plan. And estate planners agree this is a consistent theme. It can be disturbing how often the assets do not coordinate with the plan, sometimes to unsettling results.

This is perhaps also a contributing reason that many estate planning attorneys spend as much or more time handling family settlements after death than actually planning. With all the complexities of property law, tax law combined with the fiduciary responsibilities and choice of executor, trustee, and investment management, having the root of the plan disconnected by a gap in titling is unfortunate.

FULL ARTICLE

MCF Private Trust White Paper

July 2018


What do you DO anyway? - Role of a Trustee

Whether individual family member or professional corporate trustee, the roles and responsibilities of a trustee are the same and each option comes with its own risks. Not everyone is aware of the extent, importance and liability of the job. Understanding the responsibilities are important in order to help clients decide whether to take on the extensive responsibilities and liabilities of an individual trustee, or to use a corporate trustee and let the experts administer the trust.

Full Article


Trust Connection - A Monthly Report on Trust News and Information

JUNE 2018


What You Need to Know about the Tax Cuts and Jobs Act

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, a $1.5 trillion package that will significantly reform both individual and corporate income taxation. According to the Tax Foundation, the act will spur an additional $1 trillion in federal revenues from economic growth, increase Gross Domestic Product (GDP) by an average of 0.29 percent over the next decade, and lead to a 1.1 percent increase in after-tax income of all taxpayers.

Full Article