Estate Planning Strategies for Minimizing the Net Investment Income Tax on Trusts and Estates

Reducing NIIT Through Distribution of Investment Income, Investment Allocation, Use of Grantor Trusts

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Wednesday, July 22, 2015

Recorded event now available

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Program Materials

This CLE webinar will provide guidance to estate planning counsel on strategies for eliminating or reducing the 3.8% net investment income tax (NIIT) on estates and trusts. The panel will discuss planning techniques that benefit both trusts and their beneficiaries, including options for distributing income to remove it from the calculation of NIIT.

Description

The 3.8% federal NIIT can potentially result in substantial income taxes on trusts and estates because the income threshold for trusts is low—$12,300 for 2015—and because trusts typically remain in existence much longer than estates. The good news is that the NIIT is only imposed on undistributed investment income and does not apply to grantor trusts and qualified retirement plan trusts, presenting many planning opportunities.

Several techniques can help estate planners eliminate or reduce NIIT, including distributing trust income to beneficiaries, using grantor trusts, including charitable trusts, and reevaluating investment strategies and asset allocation.

Listen as our panel of experienced professionals discusses specific techniques to mitigate the effect of the NIIT on trusts and estates. The panel will outline best practices for increasing income tax savings and offer guidance on evaluating the tax and investment implications of various income distribution options.

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Outline

  1. Review of NIIT mechanics and types of investment income
  2. Implication of NIIT on trusts and estates
  3. Planning strategies to reduce or eliminate NIIT

Benefits

The panel will review these and other key issues:

  • In calculating income from passive activity, what constitutes material participation by a trust in a business?
  • Which trust investment income is potentially subject to NIIT?
  • How can investment income be distributed to trust beneficiaries without subjecting individuals to NIIT?
  • What are the pros and cons of distributing investment income to avoid income tax implications?

Faculty

Sasha A. Klein, JD, LLM
Sasha A. Klein, JD, LLM
Senior Vice President, Director of Trusts & Wealth Services
Sabadell Bank & Trust

Ms. Klein provides wealth and advisory services for high net worth individuals and their families. She serves as...  |  Read More

Mark R. Parthemer
Mark R. Parthemer

Managing Director and Senior Fiduciary Counsel, Southeast Region
Bessmer Trust

Mr. Parthemer oversees Bessemer Trust’s legacy, estate planning and fiduciary services from the Miami through...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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