trusts afforded the grantor the ability to take advantage
establish an Incomplete Non-Grantor Trust (ING) that would, legally speaking, be treated as a separate taxpayer. This allowed the taxpayer to establish a trust and avoid taxes on assets through the trust. The resident could avoid up to a 13.3% California state income tax bill while benefiting from the assets held within the trust — Senate Bill 131 rips away this benefit starting in 2023 and for all tax periods. The law will require grantors of INGs to report income to the California Franchise Tax Board, which will assess income taxes on the income of the trust assets. UTILIZE ALTERNATIVE BENEFICIAL TAX STRATEGIES This does not mean you are automatically on the hook for these taxes if you already utilize an IDGT or ING. It means you must work with your attorney to develop a more effective tax strategy reflecting these changes. At Dahl Law Group, we always keep up with changes to the law to ensure our clients have the most up-to-date and effective tax strategy. If you are using these currently and need to look at alternatives, contact our team to get started.
Law Changes Hinder the Tax Benefits of Certain Trusts
of the Code 1014 step-up basis on assets held within the trust at the time of their death. Now, the government is
A recent IRS ruling and a bill signed into law by California Governor Gavin Newsom has rolled back many of the tax advantages established by Intentionally Defective Grantor Trusts (IDGT). California Senate Bill 131 was passed into law on July 10, 2023, ending the ability of taxpayers to obtain certain tax benefits from these trusts along with Incomplete Non-Grantor Trusts established as separate taxpaying entities for income tax purposes. Additionally, the IRS issued Revenue Ruling 2023-2 that states completed gifts to irrevocable grantor trusts will not receive a step-up basis upon the grantor’s death. This removes the tax relief received from placing assets into these trusts. REVENUE RULING 2023-2 CLARIFIES UNCERTAINTY FOR INTENTIONALLY DEFECTIVE GRANTOR TRUSTS In the case of IDGTs, the IRS previously avoided addressing whether or not these
directly addressing the issue at the cost of taxpayers who have already implemented this into their estate plan and tax strategy. Intentionally defective trusts establish the grantor as the owner of the trust, meaning the grantor is responsible for the income taxes incurred by the trust — a small cost compared to the savings and additional tax-free gifts able to be made to the grantor trust. Revenue Ruling 2023-2 adds clarity to completed gifts to grantor trusts and are not eligible for a basis step-up under Section 1014 of the Code upon the grantor’s death. Therefore, assets transferred to an IDGT will not receive a step-up in tax basis upon the grantor’s death. SENATE BILL 131 ADDRESSES INCOMPLETE NON-GRANTOR TRUSTS In California, taxpayers could utilize advantageous laws from other states to
Chicken, Leek, and Blue Cheese Pilaf
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Inspired by BBCGoodFood.com
Did someone say, “Healthy chicken with tangy blue cheese”? We thought so!
Ingredients • 2 1/2 cups water • 1/2 cup brown basmati rice • 2 tsp vegetable bouillon powder • 1 bay leaf • 1 tsp grapeseed oil • 2 skinless chicken breasts, chopped
can create a precious gift for your children, grandchildren, and other loved ones that will preserve your memory for decades to come.
• 1 leek, thinly sliced • 2 zucchini, thinly sliced • 1 cup frozen peas • 4 walnut halves, broken • 1/4 cup crumbled Gorgonzola cheese
“Hold on to what is good, even if it’s a handful of earth. Hold on to what you believe, even if it’s a tree that stands by itself. Hold on to what you must do, even if it’s a long way from here.” –Crowfoot
Directions 1. In a large pot, add water, rice, bouillon powder, and bay leaf. Cover, bring to a boil, then reduce the heat and simmer for 20 minutes. 2. Meanwhile, in a large frying pan, heat oil and stir-fry chicken over medium-high heat until just cooked. Remove from pan, then fry leek until soft. Add zucchini, stir-fry for a few minutes more, then add peas. 3. When the rice is cooked, add it and any liquid from the pot to the vegetables. Return chicken to the pan, then cover and cook for 5 minutes more. Stir in walnuts and cheese and serve hot.
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