In last month’s Newsletter I shared some words and phrases that are associated with Wills. In this Newsletter, with the assistance of the Merrill Anderson Company, I am going to share some words and phrases that are associated with Revocable Living Trusts.

An inter vivos trust—more commonly described as a living trust —is established during lifetime. Think of a trust as a container, a place to hold assets (for instance, cash or securities). More formally stated, it is an arrangement in which the assets are transferred to someone else, the trustee —usually a financial institution such as ours, but sometimes an individual. The trustee keeps possession of and control over the assets in the trust and is said to have legal title of these assets, NOT OWNERSHIP , which allows the trustee to exercise most property rights. The trustee’s responsibilities and duties with regards to the trust’s assets are delineated in the trust agreement .

The trustee manages the assets in the trust for the trust beneficiaries , the recipients of the trust’s income and principal (sometimes referred to as the corpus of the trust). The beneficiaries are considered to have equitable title to the trust’s assets, meaning that they have the right to benefit from the assets managed by the trustee.

The most common term to describe the person who establishes a living trust is grantor . (You also may hear the terms settlor or creator to describe the person who sets up a trust.)

An income beneficiary is someone who is entitled to receive only the income generated from the trust’s assets. A remainder beneficiary is someone who has been named to receive the assets in the trust after the interest of a prior beneficiary has been terminated (for example, through death).

Beneficiaries also may be described as either primary or contingent . A primary beneficiary is someone who is entitled to receive immediate benefits from the trust’s assets. A contingent beneficiary’s interest in a trust is postponed or subordinated to that of the primary beneficiary.

Living Trusts may be revocable or irrevocable . A revocable trust is the more flexible of the two. The grantor can make any changes to the trust that he or she feels are warranted, at any time, and can cancel the trust altogether, if necessary. An irrevocable trust is set in stone. The trust agreement may not be changed or cancelled. It does, however, have one big plus over a living trust: tax advantages.

For those of our readers that are not intimately involved with the language of Wills and Trusts I hope that I have been helpful. Should you have special questions we are tavailable to help from our offices located in Cherry Hill, Lebanon, Linwood and Toms River.

Ira J. Brower, Founder
More and more seniors are finding themselves alone and without nearby relatives to help them with financial management. Persons in this situation will need to find an alternative—friends or professionals who can fulfill the roles that might otherwise be handled by family members.

Delegated powers
For seniors the most vexing problems are associated with incapacity. If you become incapacitated, temporarily by illness or permanently through aging:

  •    • Who will pay the bills?
  •    • Who will track the investments?
  •    • Who will make decisions about real estate?
  •    • Who will make certain that taxes are paid?
  •    • Who will balance the checkbook?

The first solution that comes to mind for these questions is the financial durable power of attorney. This document allows another person to step into your shoes, financially speaking, and make binding decisions on your behalf. A durable power of attorney may be as broad or as limited in scope as needed to make you comfortable. You’ll need to see your lawyer to have the power of attorney drafted and executed. 

Another axis of anxiety concerns health care. In this area, you may need:

  • a health care power of attorney, with medical instructions to be followed if you are incapacitated;
  • a Health Information Portability and Accountability Act (HIPAA) authorization, so that your agent has full rights to your medical records;
  • a health care proxy that may give someone decision-making power at the end of your life;
  • a living will that outlines your expectations for medical care near the end of your life.

Living trusts
Affluent individuals often rely upon a living trust for financial management in retirement. A living trust can provide financial protection in the event of disability or incapacity, as a durable power of attorney does. However, a living trust offers additional advantages, such as financial privacy at death and probate avoidance. If a corporate trustee, such as us, is named as the trustee, there will be the advantages that come with working with an institution as compared to an individual. We don’t get sick or go on vacation. Trust management is our business, and we attend to it every day.

If you are interested in this service, please make an appointment to meet with one of our officers to learn more about how we may help you. 

(May 2018)
© 2018 M.A. Co. All rights reserved.
When a financial professional provides investment advice, one of two different standards applies:

  1. the recommendation is "suitable" for the client; or
  2. the recommendation is the in client’s best interest.

To the layman, the difference in these two statements may not seem like much. To lawyers and regulators, there is a world of difference. Standard 1 has been in general use among stockbrokers. Standard 2 is the “fiduciary” standard.
The Dodd-Frank legislation required the Securities and Exchange Commission to study the pros and cons of putting all investment advisors on Standard 2, the fiduciary standard. The SEC never reached a final conclusion. But in the meantime, the Department of Labor got into the picture with a ruling of its own. The DOL decided that Standard 2 would apply whenever investment advice was provided with respect to qualified retirement assets, such as an IRA or an IRA rollover.

The DOL ruling was challenged in court, and it was invalidated in the Court of Appeals. The deadline for taking the matter to the U.S. Supreme Court expired on May 1, so the DOL’s "fiduciary rule" is effectively dead.
Next up: The SEC in April proposed three new rules of its own in this area. They are intended to enhance investor protection while preserving investor choice. The emphasis is on disclosure, rather than imposing fiduciary duties on all those who provide investment advice. Comments will be accepted during the next 90 days, and the rules might be finalized later this year.

Those in the trust industry are not affected by these developments, for the simple reason that we already are governed by fiduciary standards and always have been. You might say that we were the pioneers of fiduciary responsibility.

(May 2018)
© 2018 M.A. Co. All rights reserved.
The IRS has released some tax tips for anyone who hasn’t yet filed a 2017 tax return. The due date was extended to April 18 after technical snafus at the IRS in accepting e-filings.

  • If a refund is due, there will be no penalty for the late filing.
  • The IRS Free File online tax filing system will continue to be available for the 2017 tax year through October 15, 2018. However, some taxpayers will not qualify for the Free File tool.
  • If a return showing taxes are owed is filed more than 60 days after the April due date, the minimum penalty is the lesser of 100% of the unpaid tax or $210. The normal failure-to-file penalty is 5% of the amount due for every month that the return is late.
  • Failure to file penalties may be waived if there was a good reason for the failure, such as being hospitalized for a sudden illness. An explanation of the reason for the lateness should be attached to the return.
  • Taxpayers who have a history of filing and paying on time often qualify for penalty relief. A taxpayer usually will qualify for this relief if he or she hasn’t been assessed penalties for the past three years and meet other requirements.
  • If an error is discovered after the tax filing, it may be corrected with an amended tax return, 1040X. However, filing that return may not be necessary. The IRS has an online tool— Should I File an Amended Return?—to help taxpayers determine whether they should file an amended return to correct an error or make other changes to a return. If the 1040X is needed, it must be filed on paper; there is no e-filing available.
  • If a refund was claimed on an original return, the IRS recommends postponing the filing of a 1040X until the original return is processed.
  • Remember, the IRS will never make an initial, unsolicited contact via email, text or social media on filing, payment, or refund issues. Usually, the IRS initiates contact through regular mail delivered by the U. S. Postal Service. Any email that appears to be from the IRS about a refund or tax problem is probably an attempt by scammers to steal personal or financial information. Forward all such e-mail to

(May 2018)
© 2018 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.