IN THIS ISSUE

FAQs ABOUT TRUSTS

DO'S AND DON'TS FOR IRA BENEFICIARIES

MISSED IT BY THAT MUCH

ARTICLES OF INTEREST

I am proud to say that we will soon mark the 15th Anniversary of Garden State Trust Company. After much hard work and patience, on August 5, 2008, the State of New Jersey Department of Banking and Insurance provided approval for us to transact trust business. We formally opened our doors on September 22, 2008, with the hope of growing a successful independent trust company.

Today we have offices in Wall, Marlton, Lebanon, and Linwood, New Jersey. We currently have 16 team members dedicated to caring for and thoughtfully guiding our clients. Our growth and the positive reputation we have garnered over the years would not have been possible without our dedicated group of professionals. 

I want to especially thank Barbara Kannheiser, our CFO, who has been with me every step of the way (30 years) on our journey to establishing this incredibly special trust company.

Our Total Dedication to Our Clients

Having been in the trust industry for my entire career spanning over 50 years, I have undertaken the task of weighing the services provided to you, the client, against the backdrop of profitability to the company's "bottom line." As CEO of a truly independent trust company, my bottom line is your level of satisfaction with the services we provide.

From the beginning, we at Garden State Trust Company have differentiated ourselves from other Trust Service providers, not only by the quality of the services we provide, but by the highest standards, the uncompromising principles and character of the people who deliver these services.

Each one of us at Garden State Trust Company is dedicated to placing your interests above our own, ensuring personal success and benefit to all.

We understand that the relationship with each of our clients will evolve and that over time there will be a need for additional services. As our client's needs grow so does our responsibility as advocate and advisor.

 

Like family, we are with you for Life.

Ira J. Brower, Founder

ASK GARDEN STATE TRUST COMPANY

My adult son is disabled and receives several government benefits. I've heard that I need to set up a Special Needs Trust for him, but I'm not sure where to begin. Can you provide some guidance?

Thank you,

Lisa P.

Dear Lisa,

Thank you for reaching out. If your son is currently receiving "means-tested" governmental benefits such as SSI/Medicaid, you are correct that a Special Needs Trust (SNT) should be set up for him. Upon your passing, your assets could be directed into this trust for the benefit of your son. The trustee of this trust would have the discretion to distribute the trust funds for your son's benefit that would supplement his governmental benefits.

This type of SNT is called a 3rd Party SNT, since it is funded with assets from a 3rd party (i.e., parent, grandparent, friend). Unlike a 1st Party SNT, which is funded with the disabled beneficiary's own assets, an advantage of a 3rd party SNT is that Medicaid is not required to be reimbursed upon your son's passing. The remaining assets of the trust are free to be distributed to the remainder beneficiaries that you name in the trust document.

You should contact a qualified estate planning attorney with experience in drafting SNTs, and I would be happy to answer any questions pertaining to the administration of the trust. Garden State Trust Company has experience in the administration of Special Needs Trusts.

Sincerely,

Sean Rice, CTFA

Senior Vice President & Trust Officer

Regional Manager South Jersey and Philadelphia

(856)-281-1300

srice@gstrustco.com

One Holtec Drive, Suite G101

Marlton, NJ 08053

HAVE A QUESTION ON TRUSTS, WILLS, OR INVESTMENT MANAGEMENT?

For general informational purposes only. This information does not constitute legal advice.

Inherited IRAs have their own requirements, different from ordinary IRAs. A beneficiary who is not a spouse needs to know a number of rules. Read Do's and Don'ts for IRA Beneficiaries in one of our Informational articles this month.

In Missed It By That Much, read what happened when a taxpayer electronically filed a Tax Court appeal eleven seconds past the midnight filing deadline. An appeal was lost.  

Once again, I want to thank our clients, our dedicated team of professionals, and those who make referrals to us for our success. All of us at Garden State Trust Company look forward to many more years of caring for and thoughtfully guiding our clients.

Sincerely,

What do you think of when you hear the words "trust fund"? Many people will associate those words with the Astors, the Rockefellers or the financial titans of the 19th century. Those families did indeed employ trusts for the long-term care of family wealth. But you don't need to have billions to benefit from a trust-based wealth management plan, thanks in part to advances in technology. More and more affluent families these days are exploring the unique financial management and financial protection advantages of trusts. Here are questions that we hear frequently, and our answers.

What is a trust?

A trust is a formal, legal arrangement for the continuing care and management of property. Typically a trust is created when someone transfers money or property to a trustee, either an individual or a trust institution or bank trust department. The trustee holds title to the trust assets and manages the trust fund solely for the benefit of one or more beneficiaries. 

Can the person who creates a trust also be the beneficiary of the trust?

Yes, that is very a common approach. In a typical revocable living trust, a husband and wife might transfer their investment assets to the trustee with the expectation that the trustee will handle their investments for the rest of their lives. The trustee may remit trust income to the couple as needed, or may be authorized to pay their bills directly from the trust.

Can I be my own trustee?

Yes, you can be the trustee of your trust, or you can have a trusted family member be the trustee. But that's not a course we would recommend. Some very important reasons to let us be trustee of your trust are:

• To gain access to professional management of your assets.
• To have someone available to stand in your financial shoes should illness or incapacity strike.
• To provide financial support for your loved ones during your lifetime and beyond.
• To put all the chores of trust administration into experienced hands.

What's the best age for setting up a trust?

As a practical matter, a great many people first give serious consideration to establishing a trust as they approach retirement, or when they do their estate planning. However, many young entrepreneurs have used trusts for their wealth management once they achieve early success. There really is no "best age."

How is a trust different from other investment accounts?

A trust has an independent legal existence that makes it durable. It can survive the incapacity or death of its creator. The trustee continues to manage the trust according to its stated purposes, stepping into the shoes of the person who created the trust.

If a trust has an independent legal existence, does that mean it must pay income taxes?

In the more usual case, trust income is distributed to the beneficiaries and they pay the taxes. However, if the trust accumulates its income, yes, the trust does pay income taxes, and the tax brackets for trusts are very compressed.

Can I change my mind after I create a trust?

That depends upon what sort of trust we're talking about. A charitable trust is normally irrevocable and can't be modified. A trust in a will can be changed simply by amending the will.

Usually, this question arises about revocable living trusts, and in that case the answer is yes; you remain in full command. You can change the beneficiaries, add assets, withdraw the assets, even terminate the trust should you decide that it is not right for you and your family.

(February 2022)

© 2022 M.A. Co. All rights reserved.

Inheriting an IRA, as welcome as it may be, comes with complications. If you are a surviving spouse, there are special favorable choices for you, and this article is not for you. Nonspouse beneficiaries need to know a number of rules.

Do not contribute to your inherited IRA. This is not allowed, because the requirements for personal and inherited IRAs are different.

Do not try to convert your inherited IRA to a Roth IRA. This is not allowed.

Do change IRA custodians if you are not happy. However, moving the IRA to a new custodian must be done by direct transfer. Do not try to take a distribution and roll it over in 60 days, as this approach is not available for nonspouse beneficiaries of inherited IRAs.

Do take distributions from the inherited IRA, regardless of your age. If it is a traditional IRA, there will be income taxes to pay, but no penalty taxes, even if you are under age 591/2. If it is a Roth IRA, there will be no taxes or penalties.

Do not leave the money in the inherited IRA for more than ten years. With a few limited exceptions, the money in an inherited IRA must be disgorged in ten years. In some cases, there may be annual Required Minimum Distributions before the ten years are up.

Do name a successor beneficiary. Failure to name a beneficiary can add time and cost to estate settlement.

Do consider a Qualified Charitable Distribution (QCD). If you are age 70 1/2 or older, you may direct a transfer of up to $100,000 from your inherited IRA to a qualified charity. The amount of the transfer will not be included in your taxable income (which means you don't get a corresponding tax deduction if you itemize). 

If you don't already have a professional tax advisor, inheriting a substantial IRA is a good time to consider getting one.

(September 2023)

© 2023 M.A. Co. All rights reserved.

Antawn Sanders received a deficiency notice from the IRS that stated he had until December 12, 2022 to file with the Tax Court to challenge the notice. The Tax Court's electronic filing system is called DAWSON. Sanders set up a DAWSON account to file his petition electronically.

On December 12, at 9:59 pm, Sanders began his filing process. He downloaded the required PDF form to his android phone, and completed it. Unfortunately, when he logged back into DAWSON from his phone, Sanders was unsuccessful in uploading the form. Logging out and logging back in several times did no good.

Sanders then sent the forms to his Windows computer, to see if that device could do what the phone could not. At 11:56, a login attempt failed, but it succeeded at 11:57. There were, according to the filing, "three other steps" required before the petition could be filed, plus Sanders had to refer to the instructions several times. At nine seconds after midnight, the upload of the petition began, and it was completed at 11 seconds after midnight.

In the Tax Court, the IRS said that, because Sanders' appeal was tardy, it could not be heard by the Court. The Tax Court agreed.

It's true, the Court observed, that when an appeal was filed late because federal offices were closed due to a snowstorm the deadline was extended. But that is not the case here. There was no systemic failure affecting all taxpayers.

Ironically, had Sanders filed his petition on paper, and had he delivered it to a post office during business hours on December 12 (or earlier), it would have been timely filed even if the IRS had not received it until a week later, as opposed to 11 seconds late. The postmark rule then would have applied, and a postmark of December 12 would have been sufficient.

(September 2023)

© 2023 M.A. Co. All rights reserved.

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