Spectrum Management Blog

By Spectrum Management Group | November 8, 2016

He Did WHAT?!? Ethics in the Estate Plan

The National Malcolm Baldridge Quality Award defines ethical behavior as follows:

“The term, ethical behavior, refers to how an organization ensures that all its decisions, actions, and stakeholder interactions conform to the organization’s moral and professional principles. These principles should support all applicable laws and regulations and are the foundation for the organization’s culture and values.  They define ‘right’ from ‘wrong’ behavior.”

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Topics: Trust

By Spectrum Management Group | October 13, 2016

Powers Of Appointment: Six Rules to Encode or Decode Every Trust

Powers of Appointment are the secret ingredient to the major advantages of irrevocable trusts and the formula that makes them work, yet the code does not do a good job of quantifying them, so we will do it for them. This knowledge makes it easier to decode documents, or design them in the first place, but also to communicate the advantages to the client and beneficiaries.

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Topics: Trust

By Spectrum Management Group | July 21, 2016

Negate Probate: Settling an Estate using a Trust July Lunch & Learn: Blog post recap

Probate is a hassle in many states, so trusts give us an alternative, more private manner in which to distribute the assets of a decedent. Here, we will take a chronological walk through of the estate settlement process and the critical elements of state law and document language that need to be addressed. Estates are all controlled by state law yet the fundamental responsibilities are universal.

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Topics: Estate Plans, Trust

By Leslie D. Thompson | May 19, 2016

How to Select the Right Executor or Trustee

Selecting the right executor or trustee is a big decision facing everyone creating an estate plan. Thoughtful consideration can make every difference in the success or failure of the plan and how the beneficiaries feel about it. This article will discuss some of the key decision making factors in choosing an executor or trustee.

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Topics: Trust

By Leslie D. Thompson | April 18, 2016

Get Outta Here! Getting Capital Gains Out of Trusts

All revocable living trusts are, effectively, flow-through entities for income tax purposes and not treated as an independent taxpayer. The same is not true of irrevocable trusts. An irrevocable trust’s income is made up of the character of the returns from its investments. Thus the investment choices in irrevocable trusts make a big difference to the net after-tax returns of the trust and its beneficiaries. In general, an irrevocable trust is a taxpayer, much like a person is. However, when distributions are made in the same year the income is earned, the tax burden shifts to the beneficiary, at least to the extent of the distribution amount. To provide consistency in this shift, and to limit the beneficiary’s tax liability to the income earned that year, an allocation method was devised by the IRS. This allocation method (called Distributable Net Income, or DNI), generally, limits the income “pass-through” to the beneficiary of an irrevocable trust to the current year’s income, and does not include net long-term capital gains. The reason gains are excluded is because they are considered to be related to the rise and fall of the value of the underlying asset which is to pass to the remainder beneficiary, not as “income” to the current beneficiary.

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Topics: Trust