EST2323. Complexities of Administering Trusts from a CPAs Perspective

Once the trust is created and funded, helping assure that the client comply with the formalities of the trust (which often includes entities) are all adhered to, is critical. Improper administration of the trust will undermine the tax and asset protection benefits intended. Since CPAs have regular contact with the client and prepare tax returns for the components of the structure, the CPAs role is essential. Details of what can and should be done will be explored. The recent Smaldino case provides a checklist of errors the taxpayers made in the implementation and administration of a plan to transfer assets to an irrevocable trust. This case will be used as a framework for part of the discussion as to how to properly administer trusts. Common issues that clients frequently mishandle in trust administration will be discussed. A checklist construct for proper trust administration will be presented. This technique is easily adaptable for all trust plans from a simple life insurance trust to a complex dynastic, trust in a different jurisdiction with a complex note sale and other transactions. Income tax reporting, trust records, gift tax return considerations, handling of common expenses, monitoring a Wandry or other valuation adjustment clause, and other topics, will be addressed.

Learning Objectives:

• Learn why the CPAs role in trust administration is vital to the success of client trust plans: tax compliance, tax planning, respecting the formality of the structure, and more.
• Understand what additional services CPAs can and should provide to help clients meet the objectives for their trusts.
• Recent high profile tax cases like Smaldino, Levine and Sorensen provide guidance as to how trusts should be administered. Learn how to apply these lessons to your clients.