Is your trust subject to Massachusetts income taxes? Probably it is. But probably it also pays no income tax so it doesn't matter. I'll explain the reasons why below.
In contrast, the 35 trusts in question in the case of Bank of America, N.A., vs. Commissioner of Revenue (SJC-11995, July 11, 2016), do have to pay income taxes. The Bank of America argued that when it acts as trustee its trusts should not be subject to Massachusetts income tax because (1) as a corporation it's not a "natural person" and (2) it doesn't have sufficient nexus with Massachusetts to be considered an "inhabitant" of the state for this purpose. The Massachusetts Supreme Judicial Court in this decision disagrees, upholding the decision of the Appellate Tax Board to tax the income of these trusts.Read More
In the case of Mond v. Pitts (Mass. App. Ct. 15-P-686, Aug. 19, 2016), the Massachusetts Appeals Court corrected an erroneous decision involving two trusts created by Lorenzo Pitts, Sr., who passed away in 2009. Lorenzo Sr. created the Esperanza Trust and the Fort Hill Trust, both of which held real estate in Roxbury. While the trusts had a second trustee and at one point the second trustee also owned 1% of one of the trusts, during his life, Lorenzo Sr. became the sole trustee and sole lifetime beneficiary of both trusts. The trusts provided that at his death, "the beneficiaries shall be Lorenzo Pitts, Jr. and Robert Pitts, in equal shares." The trusts further directed that the trusts would terminate and that the property be sold and distributed "among the beneficiaries if living."Read More
Have you been asked to serve as an agent (or "attorney-in-fact" to use the technical term) under a durable power of attorney in Massachusetts, but you're not totally sure about your duties and responsibilities? Then you're not alone. Here's a primer.Read More
We see it all the time – people pay good money to set up a trust in order to avoid probate and minimize estate taxes, and then they fail to fund the trust. Without any assets in it, the trust will fulfill only some of its potential benefit.Read More
On August 8th in the case of Pfannenstiehl v. Pfannenstiehl the Massachusetts Supreme Judicial Court unanimously overturned a lower court decision that had ordered that assets in an irrevocable discretionary trust created by the husband's father be split in a divorce. The SJC in this decision upholds the use of trusts to shelter assets for future generations.Read More
Congratulations. You have been appointed trustee of a trust. That is a strong vote of confidence in your judgment and probity. Unfortunately, it is also a major responsibility. Following is a short description of your duties.
Up until now, you've had two options for your estate planning: Go to a do-it-yourself site like LegalZoom or work with an attorney who will customize your plan to meet your circumstances. Most people are afraid to fly solo online and many feel that they do not need the one-on-one attention, or cost, of an attorney. That's why we are creating a third option.Read More
Very few people need to worry about federal estate taxes today with the threshold for taxation now at $5.45 million (in 2016) and surviving spouses permitted to add on the unused portion of their deceased spouse's credit through "portability." Yet many people have estate tax planning trusts put in place when the threshold was much lower and before portability was enacted. As recently as 2003 the threshold was $1 million and before 1998 it was just $600,000.Read More