If you are an estate planner, chances are you practice in a separate property (or common law) state. After all, there are only nine community property states. But that does not mean that community property will not appear on your radar.
Trusts have significant income-tax implications because their tax brackets are compressed: they can reach the highest income tax bracket with much less income than an individual taxpayer.
Flexibility in the drafting of trusts will be even more important in 2022, when tax brackets are likely to be affected by rising inflation, the cost-of-living adjustment, and President Biden’s stimulus package. Income tax planning may not always be the first thing that comes to mind when drafting a trust, but the current political climate is causing clients to be concerned about rising income tax rates.
Written by: REBECCA KLOCK SCHROER, JD, & MORGAN WIENER, JD
Trustees face a number of complexities when administering a trust that owns interests in a closely held business. This article focuses on two of those complexities:
(1) Which standard of care applies to the trustee’s business decisions: the fiduciary or the corporate standard of care?
(2) What is the trustee’s obligation to produce information about the business to the trust’s beneficiaries?
Because there is no national consensus on either of these issues, this article will first provide an overview of each issue and then review leading cases exemplifying the different approaches taken by courts.