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Compass F inan ce
If you’re the owner, trustee or beneficiary of a trust (foreign or
domestic) that was established some years ago, it may be time
for a trust checkup. Domestic Trusts: For 2016, the lifetime estate
exclusion is $5,450,000 per taxpayer or $10,900,000 per married
couple. Marital estates under this threshold would not be subject to
estate tax and those over may need to revisit their estate planning
if this has not been done since the lifetime exclusion was materially
increased in 2011. Additionally, trusts reach the highest marginal tax
rate of 39.6% (43.4% including 3.8% tax on net investment income)
at only $12,400 of income vs $466,950 for married couple filing
jointly. Consider making annual distributions of trust net income to
the beneficiary if they are in a lower tax bracket to reduce overall
tax burden. Foreign Trusts: The IRS continues to target undisclosed
foreign accounts so ensure that all required informational returns are
being filed on an annual basis if you are the owner or beneficiary of a
foreign trust. IRS penalties for not reporting a foreign trust can be 5%
of trust assets and 35% of distributions. Forms 3520, 3520-A, 8938,
114 may be required.
ABOUT THE AUTHOR
Richard Reed, CPA, M. Tax, is
a tax principal in the Lancaster &
Reed office in Key Biscayne. The
Lancaster & Reed tax practice
is focused on the U.S. taxation
of international transactions,
international trusts and
international estates; 305.361.1014;
22 STAYING SECURE
As the world becomes more and more computerized,
it’s important to safeguard our money and our
world with tighter encryptions and stronger security
measures. But how well are they actually working?
TEXT BY STACY WYNN
Fingerprint scans are touted as
being ultra-secure, but they’re not
protected by the 5th Amendment.
This means the police can make
you provide fingerprint access but
they can’t force you to enter your passcode.
How many Google Glass wearers
turn them off when inputting PINs,
looking at credit cards or filling out
financial documents? The answer
is “not many” — it’s a potential
security breach for the wearer and those around them.
From refrigerators to washing
machines, appliances are getting
connected to the Internet. In many
cases, this means sacrificing digital
security for efficiency. Route all
systems through a strong firewall…at the very least.