Family Wealth and Estate Planning Articles

A landmark decision by the Supreme Court in Connelly v. United States has significant implications for how shares in closely held corporations are valued for estate tax purposes. The Supreme Court upheld that redemption obligations do not reduce the value of a corporation’s shares, creating a precedent that will likely affect future litigation and estate planning for family-owned businesses.

The IRS has issued final regulations for inherited IRAs, clarifying that most non-spouse beneficiaries must withdraw the entire balance within 10 years. These rules, effective in 2025, require annual distributions if the original account owner had started taking RMDs, while offering more flexibility for accounts where RMDs had not begun. Recent waivers also prevent penalties for missed distributions in certain cases.

A power of appointment in your estate plan provides flexibility by allowing a designated beneficiary to adjust trust distributions and modify beneficiaries based on current circumstances. There are two types of powers: general, which includes property in the holder’s taxable estate, and limited, which does not but may result in higher capital gains taxes for heirs. 

When choosing between traditional and Roth 401(k) contributions, consider both current and future tax implications as well as estate planning goals. Traditional 401(k)s offer immediate tax deductions but are subject to required minimum distributions (RMDs), potentially reducing the amount passed to heirs. Roth 401(k)s, while funded with after-tax dollars, allow for tax-free withdrawals and are exempt from RMDs starting in 2024, making them a valuable tool for estate planning.

A dynasty trust allows individuals to preserve and protect substantial wealth for multiple generations, potentially avoiding federal gift, estate, and generation-skipping transfer (GST) taxes. It can be established during one's lifetime or through a will and offers significant tax benefits and flexibility in designating beneficiaries. While irrevocable, it provides a lasting legacy with various protections and conditions for descendants.

A Family Advancement Sustainability Trust (FAST) can help with your estate planning goals, such as minimizing taxes and preparing heirs to manage wealth responsibly. Typically funded through life insurance, a FAST provides a structured governance system with various committees to manage investments, distributions, and administrative tasks. Establishing a FAST can also help bridge leadership gaps and support the personal development of younger family members. Consult an estate planning advisor for detailed guidance.

Understanding the tax implications of selling business property is crucial due to the complex rules involved, particularly regarding long-term capital gains and recapture rules. Different types of property, such as Section 1245 and Section 1250 properties, have specific tax treatments that must be carefully considered. For detailed guidance on specific transactions, professional consultation is recommended.

This article discusses five essential elements for effective estate planning, which are holistic coordination, current beneficiary designations, trust funding, correct asset titling, and ongoing plan review.

The article explains the concept of undue influence and provides tips to protect your estate plan from undue influence claims, such as using a revocable trust, verifying competency, preventing the appearance of undue influence, communicating with family, and including a no-contest clause.

Digital assets often leave no paper trail, making it crucial to include them in your estate plan to ensure your family can locate and access them. Take inventory of your digital assets, provide access instructions, and ensure your representatives have the necessary legal consent to manage these accounts; contact us for further assistance.