Tax consequences of liquidating a utma
Although there have been a number of court cases suggesting that self-settled trusts might not work, the facts on all of those cases have been pretty ugly.That might mean that proper planning should work just fine.Thus, you are not a beneficiary when the trust is created, so arguably the trust is not a self-settled trust.Should years in the future you need access to trust funds the trusted person might add you as a beneficiary. This creates interesting planning opportunities, but it might also create a new risk for trustees.You might choose to retain those stocks in your estate so that on death the significant appreciate is eliminated by a basis step up.If you borrow million using the highly appreciated stock as collateral, you can gift the M to a grantor trust.If you’re a trustee of an irrevocable trust, and the trust agreement is not optimal, in the past it might have been presumed that “it is what it is.” But now, do you have an obligation to use decanting to improve the provisions of the trust?Might a disgruntled beneficiary argue that merely administering the trust you have, without addressing the potential for modifying that trust, isn’t sufficient? ■ Aging: Alzheimer's affects 47 percent of those over 85. Addressing the issues of an aging are critical for many.
For example, one technique is to give someone a general power of appointment over a trust.■ DAPTs: With the general demise of the estate tax for most wealthy clients asset protection planning has assumed a more important role in planning.Domestic asset protection trusts (“DAPTs”) are trusts that you set up (you’re the settlor) but you are a beneficiary of, called “self-settled” trusts.This is particular useful to avoid tax in a decoupled state that has no gift tax (e.g., New Jersey).Example: You have a highly appreciated stock portfolio worth M.