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IN THIS ISSUE
GIVING WHILE LIVING
EVERY SILVER LINING HAS A CLOUD
ROTH PLAN TWEAKS
ARTICLES OF INTEREST
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From all of us at Garden State Trust Company we wish you a Healthy and Happy 2024! | |
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Every time we meet with a prospective client through an attorney referral or our own business development efforts one of the first questions that we must answer is "Why should I choose Garden State Trust Company, an independent trust company, as my Trustee or Executor?".
The answer is because we are a true fiduciary. A fiduciary stands in a special relationship of trust, confidence, or responsibility to another. The selection of a fiduciary is a critical decision when choosing who will provide your trustee and executor needs from generation to generation. Most often this decision is arrived at by a matter of convenience or tradition.
The choice of fiduciary should be based upon who is best qualified to help you to organize your investment, estate, retirement and planned giving needs. In the past, national and regional banks, large brokerage houses and family or friends have provided fiduciary services.
Why use the services of an Independent Trust Company?
An independent trust company must undergo a high level of regulatory oversight and must establish and maintain policies and safeguards to avoid the misappropriation of client funds and provide for the proper management of a client's account. This includes not commingling client funds with the capital of the trust company and requiring that dual controls be maintained over client assets. In addition, all independent trust companies must maintain insurance to protect clients from losses due to inappropriate actions of employees.
Another benefit of an independent trust company is its autonomy in decision making and the inherent flexibility to exercise its fiduciary responsibilities without getting mired in the conflict of internal corporate interests and politics associated with the larger multi-layered financial institutions.
As an independent trust company, Garden State Trust Company is focused on a single business and is staffed with experienced professionals who are dedicated to building and sustaining a close, personal relationship with our clients, their family members, and their professional advisors. We believe in partnership. By our charter we are not involved in lending practices, nor are we involved with the creation of new capital market products.
Being a highly regulated entity, we are well acquainted with the Federal and State statutes controlling our role as fiduciary and are trained and experienced in performing the duties of a fiduciary. Often a family member or friend does not meet these requirements and is ill-prepared to perform the duties of an unbiased fiduciary.
We also understand that today's client does not want us to be the manufacturer for all products and services we deliver like the big banks and brokerage houses; but rather they want us to take advantage of the expertise of the best providers available on their behalf.
Ultimately, the choice of utilizing the services of a smaller independent trust company like Garden State Trust Company over a larger multi-layered financial institution that likely will have more advanced technological resources ultimately depends on what you prioritize: close personal attention and customization or technological prowess and extensive resources while fitting into their box.
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ASK GARDEN STATE TRUST COMPANY | |
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Dear Garden State Trust Company,
My mother recently passed away and I've been appointed the executor for her estate. What do I do about the contents of her home?
Helen G.
Dear Helen G.,
Since you may not know who had access to the home, the very first thing you will need to do is to change the locks and the security code if she has a security system. The next thing you will need to do is to inventory the contents of the home and to secure any jewelry, antiques, artwork, etc.
As executrix of her estate, your responsibility is to see that personal effects are distributed according to her direction either through her Will or through a letter she may have left designating the distribution of certain personal items. This letter is incorporated by reference allowing the testator, or creator of a Will, to dispose of certain personal effects in his or her estate in accordance with a separate document.
Depending upon the contents of the home you may want to retain the services of a qualified appraiser to help catalog and value the contents for the purpose of determining a date of death value.
If you have siblings and the contents of her home are left to all of you without specifically being distributed by either the Will or a letter, be prepared as executrix, to become a referee when dividing her belongings.
Sometimes probating an estate can be difficult and that's when Garden State Trust Company can help. We are a professional fiduciary and offer Executor services so please give us a call for more information.
Hope this helps.
Kurt Talke
Senior Vice President & Trust Officer
Phone: 908-287-7188
Email: ktalke@gstrustco.com
1390 Route 22 West, Suite 101
Lebanon, NJ 08833
HAVE A QUESTION ON TRUSTS, WILLS, OR INVESTMENT MANAGEMENT?
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For general informational purposes only. This information does not constitute legal advice. | |
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In this month's informational article, Giving While Living learn about Chuck Feeney, a philanthropist who gave his wealth to charity before there was The Giving Pledge established by Bill Gates and Warren Buffet. In the article, Every Silver Lining Has A Cloud, the surging stock market as 2023 came to a close pushed the value of many retirement accounts to new highs. As one ages, RMDs get larger as a percentage of the account value.
If you are thinking of getting away in 2024 read The Best Place in the U.S. to Visit Every Month of 2024 in one of our Of Interest Articles.
Sincerely,
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Chuck Feeney died last October, at age 92. Who's he? Before there was The Giving Pledge established by Bill Gates and Warren Buffett, there was Chuck Feeney. Both Gates and Buffett claim Feeney as the inspiration for their commitment to give half of their wealth to charity, and their drive to have all wealthy persons make a similar pledge. Feeney was a philanthropist that few have heard of, because he hated publicity.
Chuck Feeney was born in New Jersey in 1931 during the Great Depression. He served in the Air Force during the Korea War and used the GI Bill to attend the Cornell School of Hotel Administration. He and fellow Cornell alum Robert Miller founded the Duty Free Shoppers Group in 1960 to sell liquor, tobacco, and other luxury goods to tourists and American servicemen.
The idea was a great success. According to a Forbes article, in 1967 DFS paid dividends to Feeney of $12,000. Ten years later, the annual payout had grown to $12 million.
But Feeney grew somewhat disillusioned with his wealth. When asked if he was rich, he said, "How much is rich? Beyond all expectations. Beyond all deserving, so to speak. I just reached the conclusion with myself that money, buying boats and all the trimmings didn't appeal to me." He decided to give his wealth away.
In 1984 Feeney founded the Atlantic Philanthropies and transferred to it his entire stake in the DFS Group. He conducted his charity anonymously. Rather than put his name on buildings, Feeney would leverage his donations, getting other wealthy people to join in a project or get matching funds from government.
His philanthropy continued substantially in secret and under the radar until DFS Group was sold in 1996. The share going to Atlantic Philanthropies was $1.63 billion.
Feeney's great plan was to give essentially all of his money away during his life, not just 50%. Over the years Feeney gave $8 billion to charity. According to The New York Times, in his last decades Feeney did not own a home or a car, preferred buses to taxis, and rented a two-bedroom apartment in San Francisco where he lived with his second wife.
How is The Giving Pledge coming along? As of 2023, there were 242 pledgers in 29 countries who have promised that half of their wealth will go to charity. Pledgers range in age from 30s to 90s, with the largest group in their 60s. Mr. Feeney recommended they not limit their giving to 50%, and that they make their gifts during life, not after death. Only in that way can they get the satisfaction of seeing the good that their money has achieved.
(January 2024)
© 2024 M.A. Co. All rights reserved.
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Every Silver Lining Has a Cloud | |
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The surging stock market as 2023 came to a close pushed the value of many retirement accounts to new highs. There is no such thing as having "too much" money for retirement.
However, for those who are taking Required Minimum Distributions (RMDs) from their accounts, there are tax considerations to keep in mind. As one ages, RMDs get larger as a percentage of the account, because one's life expectancy gets shorter. Couple that with a boost in the account value, and the RMD could be much larger than expected in 2024.
Having extra income is welcome, of course, but there are tax considerations to keep in mind. The extra cash distribution could push the retiree into a higher tax bracket. It may trigger surcharges on future Medicare premiums, and it could increase the income tax on Social Security benefits. In some cases the 3.8% surtax on net investment income could be triggered. That applies when modified adjusted gross income (basically adjusted gross income plus any tax-free income from municipal bonds) is larger than $200,000 for single people or $250,000 for married couples. Those thresholds are not inflation adjusted.
Financial planners offer three strategies for reducing taxes on RMDs.
Keep working. RMDs are required from 401(k) plans, unless the plan participant is still working for the employer. In that situation, RMDs can be delayed until retirement and separation from service, which can happen at any age. However, note that this rule does not apply to 5% owners of the employer. Delaying RMDs will make them still bigger when they finally do begin. Note also that this rule does not apply to any traditional IRAs that the participant may have--RMDs from those must begin the year the owner turns 73.
Qualified charitable distributions (QCDs). Those who are 70 1/2 are permitted to direct their IRA custodian to make a contribution to a qualified charity. The maximum amount per taxpayer is $105,000 in 2024, as the threshold is now indexed for inflation. A QCD counts as a required minimum distribution, but it does not get added to taxable income, so the tax troubles mentioned above are avoided.
A married couple could each have a QCD of up to $105,000, but only if they each have their own IRA.
Convert the IRA to a Roth IRA. Unlike the traditional IRA, there are no RMDs with the Roth IRA. What's more, the Roth IRA distributions are generally tax free, and so do not create additional tax problems. However, an income tax must be paid on the entire amount of the conversion to a Roth IRA, and that can be a lot to handle in a single year. Hence, it may be better to do the Roth conversion gradually, over a period of years. A down market is a good time for a conversion, as the tax cost will be lower.
RMDs during retirement cannot be converted to Roth IRAs, but conversion of IRA withdrawals in excess of the RMD is permitted.
Looking ahead, the wider tax brackets and lower top rates enacted in 2017 are scheduled to expire after 2025. It may make sense to take advantage of those lower brackets while they remain available this year and next.
(January 2024)
© 2024 M.A. Co. All rights reserved.
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A variety of rule changes for retirement plans were enacted a year ago in the SECURE Act 2.0. Some of those changes had delayed effective dates. This article reviews changes affecting Roth retirement accounts that took effect on January 1 of this year.
Roth 401(k) accounts
A Roth 401(k) account is similar to a Roth IRA, in that there is no current income tax benefit, but all future distributions potentially are completely tax free. An important advantage for the Roth 401(k) account is that the contribution limit is much higher, so much more can be saved for retirement. A disadvantage has been that the Roth 401(k) account was subject to Required Minimum Distributions (RMDs), while the Roth IRA was not.
That changed on the first of the year, such RMDs are no longer required. However, they are still required for earlier tax years. If you’ve been taking RMDs already from a Roth 401(k), you should have taken one for the 2023 tax year, for example. But you won’t need to take one for this year.
Note that the age at which the RMD rule begins is now 73. Those who were born in 1954 or later can wait until next year to begin their required distributions.
529 plan conversions
What happens if the amount of money saved in a 529 college savings plan turns out to be more than is needed for college? At today’s tuition rates, that may seem an unlikely result, but it can happen. Another family member may be named as the account beneficiary, or the money can be withdrawn, but then is subject to taxes and penalties.
Beginning this year, there is another option. The excess funds may be rolled over into a Roth IRA for the student beneficiary. Although this sounds like an excellent alternative, as the new graduate gets an early start on his or her retirement nest egg, there are important limits.
- The rollover will be considered an IRA contribution, subject to the IRA contribution limits. For 2024, that limit is $7,000 or 100% of earned income, whichever is lower. Therefore, the new graduate must have earned income at least equal to the rollover amount.
- If the full $7,000 is rolled over in 2024, the new graduate is not allowed any additional IRA contributions. However, this has no effect on eligibility to contribute to an employer’s retirement plan, such a 401(k) or Roth 401(k).
- A lifetime limit of $35,000 applies to these rollovers, so it will take about five years or so to reach the cap.
- The account must have been open for more than 15 years.
- Contributions and earnings on those contribution from the preceding five years may not be rolled over.
The primary tax benefit of the 529 savings plan remains the avoidance of all taxes on withdrawals used to pay qualified education expenses, while the new possibility of rollover of unused funds to a Roth IRA makes the strategy still more attractive.
(January 2024)
© 2024 M.A. Co. All rights reserved.
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WALL - MAIN OFFICE
732-255-5000
SOUTH JERSEY / PHILADELPHIA REGION
856-281-1300
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LEBANON REGION
908-287-7188
LINWOOD / SOUTH JERSEY REGION
856-281-1300
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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. ©2024. All rights reserved. | | | | |
