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Planning for Deductions in Trusts and Estates: Excess Losses on Termination, Distributions, Charitable Contributions

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, July 12, 2023

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This webinar will explain how planning for deductions of trusts and estates can significantly reduce taxes paid by these entities and their beneficiaries. Our panel of trust and estate attorneys will guide trust and estate advisers through planning for distributions, charitable deductions, and excess deductions on termination, focusing on allocating and timing these valuable deductions to minimize tax liability.

Description

Distributions, charitable contributions, and excess losses on termination dramatically impact the taxation of a trust and its beneficiaries. Proper planning can minimize taxation and maximize deductions for trusts and estates. Trusts and estates can take tax deductions for charitable contributions. Unlike individual deductions, these are not subject to adjusted gross income limitations, and these contributions can be made to foreign charities. However, there must be a provision for the contribution in the trust document or will.

IRC Section 661 governs distributions made by complex trusts. Complex trusts, unlike simple trusts, are not required to distribute all income but can accumulate accounting income. These trusts can deduct the income required to be distributed but not more than the trust's distributable net income for the year. The elimination of miscellaneous deductions by the Tax Act of 2017 paved the way for Section 67(e). This section states that trusts are not affected by the suspension of miscellaneous deductions and further that administrative costs incurred, which would not have been if assets weren't held in the trust or estate, are indeed deductible.

Planning for excess deductions on termination can provide significant tax deductions for beneficiaries. The trustee has discretion to allocate these deductions to various types of income and, ultimately, the trust or the beneficiary. Analyzing these deductions to ascertain the type of income each can offset and whether they are deductible by the trust or beneficiary can provide significant tax savings.

Listen as our panel of trust and estate experts explains how planning for deductions can substantially reduce taxes paid by trusts and estates and their beneficiaries and heirs.

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Outline

  1. Planning for deductions in trusts and estates: introduction
  2. Distributions
  3. Charitable deductions
  4. Excess losses on termination
  5. Trusts
  6. Estates
  7. Reporting deductions

Benefits

This webinar will review these and other critical issues:

  • Planning for excess deductions on termination to maximize tax savings
  • Steps to ensure a trust's or estate's charitable contribution is deductible
  • Reporting excess deductions on termination
  • Allowable deductions under IRC Section 67(e)

Faculty

Gadarian, Gregory
Gregory V. Gadarian
Partner
Gadarian & Cacy

Mr. Gadarian's practice focuses on tax strategy, estate planning and asset protection law. Previously, he was a...  |  Read More

Lee, T. James
T. James Lee
Director
Fennemore Craig

Mr. Lee advises clients in estate planning, private wealth law, tax and business law, international matters, and real...  |  Read More

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