With the end of 2017 nearing, Garden State Trust Company is close to achieving another milestone! We’re really excited in 2018 to be embarking on our tenth year! In that time, we’ve grown our team and family of clients to reach all of New Jersey.

We truly appreciate the trust our clients and their families have placed in us and are thankful for the continued opportunity to help them achieve their goals.

What are your goals for 2018? If you are working and looking forward to retirement someday, we suggest a goal of maxing out your 401(k) or IRA to grow your retirement savings faster. Maybe retirement is your goal for 2018? If so, we’d be happy to discuss how you can rollover that 401(k) into an IRA to maximize the tax-deferred growth, or review your financial situation to see if you’re as financially ready as you think you are. Take the first step towards your 2018 goals by giving us a call.

From all of us at Garden State Trust Company we wish you peace, joy, prosperity and good health throughout the coming year. Thank you for your support and confidence in our abilities. We look forward to continuing to work with you for many years to come.
  Ira J. Brower, Founder
In 2009 Elizabeth Briggs amended her revocable living trust to disinherit her son, Thomas, leaving the trust assets to her daughter, Judith. The amendment stated that Thomas knew the reasons for his disinheritance.

After Elizabeth died in 2013, an attorney for the estate and trust advised Thomas that he had received no property from his mother’s estate. The notice also advised Thomas that he had 60 days to commence any judicial proceeding against the trust.

Acting as his own lawyer, and within the 60 days, Thomas e-mailed the county clerk and the attorney a "Notice of Objection to the Trust Instrument of Elizabeth A. Briggs." The nature of objection was not specified, and no relief was requested. No court file was opened.

Some 611 days after Thomas received the 60-day notice, he commenced a judicial proceeding to contest the amendments to the trust. He also alleged undue influence over Elizabeth by Judith, as well as that she had breached her fiduciary duties.

In 2010 the relevant state law (South Dakota) had been amended to create the 60-day window for lodging an objection to the validity of a trust or a trust amendment. That specific statute of limitations superceded the more general state statute of limitations governing undue influence claims, the lower court held, and the South Dakota Supreme Court now agrees. Thomas' filing of an objection to the trust did not stop the clock. He had 60 days to commence his action; he did not, and so the current suit is untimely. The trust amendment is preserved, and Thomas is disinherited.

As to the alleged breach of fiduciary duty, Judith was not named as a defendant to the lawsuit. The trust is not liable for any of Judith’s actions as her mother’s caretaker, even assuming that she exercised undue influence. Accordingly, that claim was dismissed as well.

(December 2017)
© 2017 M.A. Co. All rights reserved.
Bitcoin, the popular digital currency, went on a tear in 2017, rising in value by 900% in the first 11 months. More and more investors are taking notice. On November 30 The Wall Street Journal ran a front-page article, "Bitcoin Mania: Even Grandma Is In." On the advice of her grandson, Rita Scott invested a few hundred dollars in bitcoin in October and was 45% ahead when she sold the position a few weeks later.

To some extent, the popularity of bitcoin may be driven by bad assumptions about the tax implications of investing in it.
The IRS Weighs In

In March 2014 the IRS delivered its views on the emergence of digital currencies. The most important observation was that a digital currency such as bitcoin is property, not currency. As such, it has a tax basis. Using bitcoin in making payments will generate taxable events, a major defect in using it for routine transactions.

For example, assume an individual used a bitcoin acquired for $1,000 in January 2017 to buy something today worth $10,000. Seems like quite a bargain. But the use of the bitcoin in this situation generates a taxable gain of $9,000, the difference between the $1,000 basis and the $10,000 value of the transaction. That amount will be subject to income tax. The tax may be at capital gain rates if the bitcoin is a capital asset in the hands of the owner. On the flip side, should the value of bitcoin go down, a subsequent loss by the investor may or may not be deductible.

The Service clarified that bitcoins won’t be an avenue to avoiding other tax rules. For example, bitcoins received by an independent contractor for performing services will be considered self-employment income, subject to self-employment tax as well as income taxes. If wages are paid in bitcoins, they are still subject to employment taxes. Payments made in bitcoin are subject to the same information-reporting requirements as payments made in dollars. Payments made in virtual currencies are subject to backup withholding in a manner similar to payments in dollars.
Finally, the IRS warns that tax penalties will apply, including accuracy-related penalties and penalties for failure to file information returns when required

Latest Development

To pursue cases of tax evasion related to bitcoin, the IRS sought access to the records of Coinbase, a major bitcoin exchange. Coinbase sought to bar or limit that access, but they were only partially successful. A U.S. District Court judge ruled in late November that Coinbase must turn over to the IRS the records of any client who had at least one bitcoin transaction worth $20,000 or more. Coinbase has 14,355 such users among its 6 million clients, but only 800 to 900 have been reporting their bitcoin transactions to the IRS. The Court ruled that the IRS’ suspicion of tax avoidance was justified.

Before the ruling was announced, bitcoin had reached $11,000. When the news broke, the price fell by $2,000 immediately, but later recovered somewhat.
To make it possible for voluntary retirement savings to keep up with inflation, the various numerical limits embedded within qualified retirement plans are indexed for inflation. In October the IRS announced the numbers that will apply in 2018, as shown in the following table:1
Catch-up contributions are permitted by those employees who are 50 years of age or older during the calendar year.

Personal saving for retirement never has been more important. These tax benefits make saving a bit less painful.

(December 2017)
© 2017 M.A. Co. All rights reserved.
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Because of the rapidly changing nature of tax, legal or accounting rules and our reliance on outside sources, Garden State Trust Company makes no warranty or guarantee of the accuracy or reliability of information contained herein nor do we take responsibility for any decision made or action taken by you in reliance upon information provided here or at other sites to which we link. ©2017. All rights reserved.