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To Bruce's excellent response, I would add that the opportunity to use "exemption portability" here is already largely lost. Per the OP, Husband has already died. His estate plan directs that a bypass trust be established. The amount directed to go to the bypass trust will use up a large p...

Eric......what determines whether the CG income is taxed to the trust vs the beneficiary? That's a complicated issue. Conveniently, I'm going to be travelling today and tomorrow, so I may not be able to explain this fully. :wink: In technical terms, the issue is whether capital gains are included i...

Generally, no. Assets in a survivor's trust or marital trust get a step-up at the surviving spouse's death, because those trusts are included in the surviving spouse's estate for tax purposes. A bypass trust normally isn't.

Welcome to the forum! Lots of nuances here, but generally: 1. The trust will be taxed on income that it accumulates. 2. If the trust makes a distribution during the year, or within a limited grace period thereafter, the trust may deduct that distribution from its income. 3. The beneficiary then pick...

When I went to OS 10.8 I had to upgrade as Quicken 2006 would not work with 10.8 and I have 20 years of data in that database. As a stopgap, you could use Quicken Mac 2007 for Lion (which I understand also works with Mountain Lion). I use it pending a more modern long-term solution from Intuit. The...

it is perfectly acceptable to deviate from market weights (stocks or bonds) if it is done to build yourself a more appropriate and comfortable allocation for your particular needs. I agree with this statement. But then, it is perfectly consistent with the "total market" philosophy. "...

I didn't vote for "Other," but would like to add one now: "Offer Admiral shares for individual 401(k) and SIMPLE IRA accounts." As above, this suggestion could be coupled with a fixed admin fee to cover the extra costs of dealing with those accounts. The extra costs should be rel...

Does it make sense to ask Vanguard to offer admiral shares of fund of funds when it is not legal for them to do so? As others have noted, there are several workarounds. I'll suggest another: Have the fund of funds invest solely in Admiral Shares, and then impose a "low balance fee" on cus...

You can only use the deceased spousal unused exclusion (DSUE) amount from your last deceased spouse. She can use her first husband's DSUE amount on gifts during her lifetime, or at her death if she dies before her second husband dies. . . . When her second husband dies, her remaining DSUE amount fr...

How would YOU have handled it? I would not have applied the change to existing accounts (until and unless a customer initiated a beneficiary change, at which time Vanguard could have rejected any new selection that did not conform with its policy). As for communication, I recall the generic mailing...

In this case, Vanguard decided to stop offering the ability to offer nearly limitless beneficiaries (i.e. each mutual fund in each IRA could have it's own beneficiary, or 10 different IRA could each have a different set of beneficiaries). Please review the article at my link. They did much more tha...

I hate to say this, as I'm generally a big fan of Vanguard, but I lost confidence in its judgment in estate planning matters after this incident . I appreciate that the trust company is a separate entity, but that cuts both ways. It can't claim the reputational benefits of its association with Vangu...

For reference, here is a prior thread hashing out this issue.

Portability is not indexed for inflation, and is not available for GST tax purposes. Another problem with portability: You can carry over exemption only from your last deceased spouse. That's a problem for widows and widowers who remarry. My wife and I are in our early 40s. If I die now, there's a ...

As others have suggested, politely inquire and note the apparent error first. I once had a new client send a very angry message in response to a bill. He was absolutely furious. And then shortly thereafter he apologized profusely, as he had simply misread the bill. He had had a bad experience with a...

I appreciate Vanguard very much, like its mutual ownership structure, and want to keep things as they are. That said, I don't think mutual ownership, by itself , assures that an organization will be operated exclusively for the benefit of its owner-customers. For example, consider that a mutual life...

I emailed Saturna and they replied by saying that the inclusion of Vanguard and Fidelity on the commission-free list was a mistake. They also mentioned there being a $10 surcharge that applies in some cases to cover mailings, etc. I've asked for clarification.

My wife held her HSA money in a Saturna mutual fund several years ago. Our experience was fine, but we were very low-maintenance customers who never put their service to the test. I don't think we ever even called a customer service representative. We eventually moved the account not because of any ...

I also find it highly unlikely you could persuade a qualified trustee to buy the house or lend trust funds to the income beneficiary. Bruce I'm thinking the trustee may be a family member. That doesn't mean it's all right to do something improper, of course, and making even a secured loan to this p...

He does have a lawyer - not sure whether he is good or not, but there is not much I can do about that! What are some of the levels the approach could be problematic? And would we really need a lawyer just to make the gift to him? I didn't realize he had a lawyer. I don't like to second-guess other ...

I don't believe the renunciation of the income interest is a taxable gift to the remaindermen unless you tell me I'm wrong, Counselor. :wink: The original gift to the remaindermen was made by the grantor. The grantor made a gift to the remaindermen and a gift to the life beneficiary. Two different ...

Your father-in-law needs to have an experienced trust lawyer review the trust instrument and advise him on his options. Possibly the trust could lend funds to your father-in-law, depending on the terms of the trust instrument and state law. In effect, your father-in-law would be refinancing his exis...

In addition to the "tax on dividends," as sscritic describes, and the 3.8% Medicare tax on net investment income (when applicable), one should also consider the effect of the phase-out of itemized deductions. This can increase a max-bracket taxpayer's effective marginal rate by up to 1.2%,...

I put only the employee portion into the solo 401K and the employer portion into a SEP IRA where I can use Admiral shares. I'm not sure it's permissible to contribute both to a solo 401(k) and a SEP IRA for the same business for the same period (even if one contribution is made by the "employe...

Only downside to this approach is you lose the FTC on the 6% of LS Income in International. I had a similar thought. IIRC, the foreign tax credit is worth about 20 basis points. 6% of that is about 1 basis point. Putting all this information together: -- An 80/14/6 mix of Total Bond Admiral, Total ...

Vanguard requires specific language in the trust before they will accept it. If you are counting on them to be a co-trustee, you should send them a copy for pre-approval. If you do not have the required language currently in the trust document, it's a lot easier to get it added while you are alive....

letsgobobby wrote:Did vanguard accept being a co trustee?

I'm not dead yet! (With apologies to Monty Python.) However, Vanguard advertises that it will serve as co-trustee. (Click on the link shown, then click on "Trust services details and fees" on the lower right side of the page.)

Trustee responsibilities fall into three general areas: (i) administration (e.g., bookkeeping and tax filings), (ii) investments, and (iii) distributions (including direct expenditures on behalf of a beneficiary). I'm sure Vanguard's trust company would handle the first two areas well. My concerns a...

VictoriaF wrote:He should father some children to pass his longevity genes.

You wouldn't happen to be a fan of Robert A. Heinlein?

bankmaggot wrote:I heard that getting an attorney involved with my size of estate is not worth it.

But you titled this thread, "Kids inherit Millions," implying that you will have a multi-million-dollar estate.

I received a PM asking for source material on the issue sscritic and I discuss above. Following is an excerpt from RIA's Federal Tax Coordinator (a reference series for tax practitioners). A payment or a transfer of property by a parent for a minor child's support isn't a gift to the extent that the...

The word gift does not appear in Publication 510 and the word dependent doesn't appear in Publication 950. Because the two concepts are unrelated. Thus you can't give a gift to a dependent; no such thing exists according to the IRS. Absolutely you can make a taxable gift to a dependent. For that ma...

Hypothetically speaking, if my son pursues graduate programs without any earned income, then it appears we can keep him as a dependent, and any financial support we provide wouldn't be considered as 'gift', and thus not subject to gift tax, regardless of his age.. Is that correct? No, it doesn't wo...

Is that accurate? My understanding is that the entire fund still has the private foundation 5% minimum distribution requirement but, because there are adequate distributions from other subfunds, the main fund doesn't require the individual funds to distribute 5%. I don't follow this area as closely...

It will be a subtlety, anyway. As long as we can just go on writing our checks and making our transfers, and it doesn't create a mile-high mound of tax paperwork most of us will just go on doing it, blinking twice at the tiny fluctuations the first time we see them. Maybe the people with money mark...

How does someone go about in finding a good estates and trust attorney? If your state has a Board of Legal Specialization, that's a good place to start. My state's board has a searchable index by practice area, location, etc. For a middle-class client, often the "sweet spot" is a board-ce...

I don't understand the theory behind password policies that divide characters into distinct groups and require that you take 2 from column A, at least 1 from column B, no more than 2 from column C, and at least 2 from column D. I recall seeing this xkcd comic recently . Possibly on this forum, in w...

Living trusts are overhyped and oversold, and for most people not necessary. On that theme, I'd describe living trusts as the variable annuities of estate planning. Consider: 1. Both are appropriate in some cases, but oversold. 2. Both can cost more than they save. 3. Both rely on a bogeyman to dri...

chaz wrote:

JDCPAEsq wrote:

dhodson wrote:There does not appear to be any real certification process for lawyers and estate planning.

That's not the case in Florida where there is a certification process for many legal specialties.
John

California also.

Texas also.

Others tried to convince me not to do the Living Trust but to let their firm handle the 'simple probate'. I am not an attorney but know that probate usually pays 3 percent of the estate to the attorney, which is why I think they appreciate 'simple probates'. My wife charges between $1500 to $2500 f...

As long as a donor advised fund (DAF) is on the table, you may want to instead consider setting up your own charitable foundation. I agree generally with this advice, and agree that at large asset levels a private foundation may be more cost-effective than a donor-advised fund. However, I hope you ...

Regarding the length of Malkiel's position, see this book from the late '90s. The introduction describes the Asian emerging markets of the time as "an unprecedented buying opportunity." I was skeptical then and am skeptical now, but this is not a new perspective for him. He was on that tra...

Malkiel has been a China enthusiast for a long time -- if I recall correctly, since the 1990s. I'm inclined to give him the benefit of the doubt, as one of the sources mentioned above suggests, and assume he is just putting his money where his mouth is. His actions there may well be a mistake, and c...

Grok's post is not a suggestion that you attack the person making the argument, but to do the very thing you suggest - investigate the person's assumptions, methodology, logic and conclusions. Understanding where the person's interests lie assists greatly in doing that. Further, it is a great remin...

I think its great that we have so many diverse professionals here, such as tax lawyers like yourself. Please be as technical and pedantic as you can. That's how we all learn. I admit I was a litle hazy myself in understanding how Vanguard was organized corporately. That's why I said they were not a...

As a legal matter Vanguard is a taxable corporation, and it is treated as such under the tax code. It's not a non-profit. It happens to be managed so as not to generate a net profit, but if it ever does generate a profit it will be taxed. Sorry to be pedantic. Occupational hazard of being a tax lawy...

Interesting. Anyway, my general statement applies in other states. Texas, for example, called its estate tax (back when we had one) an inheritance tax. So I encourage people to be cautious when reviewing state laws.

This appears to be the New Jersey statute . One word of caution on terminology: Some states call their estate tax an "inheritance tax" even though it really isn't anymore. Most (not all) states have repealed their old inheritance taxes and replaced them with an estate tax (or nothing). But...

The will says B gets $300,000 and C gets $200,000. What do they each get? Does the representative have the power to decide how the $425,000 is apportioned? Or does this go before a judge? Depends on what the will says, or if the will says nothing, on what the state apportionment statute provides. U...

If you're taking an author's conclusion on faith -- relying on his or her credentials rather than his analysis -- then yes, it's important to know what the author's biases might be. But the best authors make an intellectual argument that either stands or falls on its own. And of course this applies ...