Articles From Lumsden McCormick

An Irrevocable Life Insurance Trust (ILIT) can help keep life insurance proceeds out of your taxable estate, reducing potential estate tax liability. By transferring ownership of a policy to an ILIT or having the trust purchase a new policy, you ensure the death benefit passes tax-free to beneficiaries. While ILITs offer significant advantages for high-net-worth individuals, they come with complexities such as gift tax considerations and loss of control, making professional guidance essential.

Giving Tuesday is a global movement that inspires generosity during the holiday season, encouraging nonprofits, businesses, and individuals to give back through donations, advocacy, and volunteerism. It offers organizations a powerful opportunity to raise funds, build awareness, and engage their communities. With participation growing each year, planning ahead and setting clear goals can help maximize impact and strengthen connections with supporters.

Strong recordkeeping is essential for business success, helping ensure accurate financial reporting, compliance, and the ability to defend tax deductions. A recent tax court case highlights how poor documentation can lead to denied deductions and penalties, underscoring the need for practices like separating business and personal finances, maintaining contemporaneous records, and using reliable accounting systems. Implementing these measures protects your business from costly mistakes and IRS scrutiny.

Intrafamily loans can be a flexible way to transfer wealth, support major purchases, and preserve family assets while offering tax advantages—when structured correctly. To avoid IRS reclassification as a gift, these loans must follow strict formalities, including charging interest at the applicable federal rate and documenting repayment terms. While financially beneficial, they carry emotional risks, so careful planning and professional guidance are essential.

Borrowing can help nonprofits fund major projects or manage cash flow gaps, but it comes with higher interest rates, strict lender requirements, and added risk. Understanding loan types—such as lines of credit, bridge loans, and long-term financing—and preparing detailed financial documentation are essential steps before applying. Careful planning ensures your organization avoids costly mistakes and secures funding that aligns with its mission.

Businesses that accept large cash payments have strict IRS reporting obligations. Transactions over $10,000 must be reported using Form 8300, and failure to comply can lead to steep penalties. Understanding what counts as cash, electronic filing rules, and proper recordkeeping is essential to stay compliant and avoid costly mistakes.

Local government leaders across the country are consistently tasked with finding ways to stretch shrinking budgets and dwindling staff. Here are just a few of the benefits Lumsden McCormick can offer government entities looking to maximize resources. 

With the passing of the One Big Beautiful Bill Act (OBBB), a number of the tax incentives created or strengthened by the Inflation Reduction Act (IRA) of 2022 have been repealed. Learn about the credits that will be expiring early under the new tax legislation and consider taking advantage of them before the window to do so closes.

A quiet trust, also known as a silent trust, is an estate planning tool that keeps beneficiaries unaware of the trust’s existence until a specified age or milestone. While it can preserve motivation and protect heirs from external pressures, it may also lead to missed opportunities or resentment. For some families, an incentive trust, which rewards responsible behavior may offer a more balanced approach.

Creating an effective nonprofit budget requires more than adjusting last year’s numbers. A collaborative approach, accurate forecasting, and scenario planning can help organizations stay agile and prepared for uncertainty. Building reserves and aligning budgets with strategic goals ensures long-term sustainability and mission success.