Daily Archives: March 23, 2010

Marital Deduction Planning

By making a QTIP election, the Executor will enable the decedent’s estate to claim a full marital deduction. To qualify, the trust must provide that the surviving spouse be entitled to all income, paid at least annually, and that no person may have the power, exercisable during the surviving spouse’s life, to appoint the property to anyone other than the surviving spouse. Since the Executor may request a 6 month extension for filing the estate tax return, the Executor in effect has 15 months in which to determine whether to make the QTIP election. Continue reading

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Distributable Net Income and Income in Respect of a Decedent

In general, any distribution of income or principal by an estate will cause the beneficiary to be taxed to the extent of the lesser of (i) the estate’s “distributable net income” (DNI) or (ii) the amount of the distribution. Estate income is said to be “carried out” to the beneficiary. Capital gains are an exception. Since they are allocated to corpus and are not distributed to beneficiaries currently, they are generally excluded from DNI. Continue reading

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The Decedent’s Final Income Tax Return

A decedent’s final income tax return must be filed by the Executor by April 15 of the year following death. A joint return may be filed if the decedent’s spouse did not remarry during the year. If no Executor has been appointed by the due date of the return, a joint return must be filed by the surviving spouse. In that case, the later appointed Executor may revoke the surviving spouse’s election to file a joint return and file a separate return for the decedent’s estate within one year from the due date of the return, including extensions. Continue reading

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Revision of New York Power of Attorney Law Takes Effect

Effective 9/1/09, NY General Obligations Law §5-1501, which governs the content and execution of powers of attorney, was revised and amended. Powers executed prior this date remain valid, but are subject to the amended statute. Continue reading

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ASSET PROTECTION: ETHICAL CONSIDERATIONS

New York County Surrogates Court, in In re Joseph Heller Inter Vivos Trust, 613 N.Y.S.2d 809 (1994), approving a trustee’s application to sever an inter vivos trust to “insulate[] the trust’s substantial cash and securities from potential creditor’s claims that could arise from the trust’s real property, observed that “New York law recognizes the right of individuals to arrange their affairs so as to limited their liability to creditors, including the holding of assets in corporate form . . . making irrevocable transfers of their assets, outright or in trust, as long as such transfers are not in fraud of existing creditors.” Continue reading

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Revised New York Criminal Tax Statutes

Tax professionals preparing 2009 New York State corporate, income, employment and sales tax returns should be alert to statutory changes which create new tax offenses and which impose stricter criminal penalties for existing offenses. In some cases, tax professionals may be prosecuted under an accomplice theory for aiding or abetting dishonest taxpayers. This memorandum summarizes the new legislation, whose objective is to improve tax compliance and prevent tax evasion by drastically increasing penalties for serious acts of tax evasion and tax fraud. For more information about the new statute, and for legal guidance, please contact this office. Continue reading

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Business Succession Planning Involving Family Members

Business Succession Planning Involving Family Members Continue reading

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