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On Halloween, October 31, we celebrate ghosts and scary things. The spirits of the deceased are remembered on November 1 and 2, All Saints Day and All Souls Day, respectively, also known as the Day of the Dead celebration.

Yet, you might not know this October 30 is the 22^nd annual Create a Great Funeral Day. Before Halloween ghosts and Day of the Dead spirits can go a-haunting, there’s usually a funeral or memorial service – the party no one wants to plan.

Confronting the idea of our own death causes uncomfortable thoughts. Rather than facing the inevitability of our dying, our culture denies death. Yet at the same time, we have this enormous celebration of scary and death-related things at Halloween.

The idea behind Create a Great Funeral Day is to consider how you would like to be remembered. By letting loved ones know how you’d like your life celebrated, the survivors’ experience can be so much easier.

Create a Great Funeral Day began in 2000, started by Stephanie West Allen. She saw her husband struggling to pull together a meaningful funeral for his mother, who had left no directions before she died. Observing his grief, Allen felt that knowing what her mother-in-law might have wanted would have eased the pain of memorial service preparations.

Why do people hesitate to discuss funeral planning, let alone do anything concrete about it in advance?

Social psychologists cite the Terror Management Theory, that all human behavior is ultimately motivated by the fear of death. Death creates anxiety, not only because it can strike at unexpected and random moments, but because its nature is essentially unknowable.

The awareness of our own eventual death, called “mortality salience,” affects our decision-making in the face of this terror. Many people decide to avoid the topic.

Create a Great Funeral Day prompts us to be mindful of our mortality. This self-awareness enables us to plan reflectively in advance, so we don’t leave our families to react disorganized and stressed, after our death.

Blue Öyster Cult’s 1976 hit song, “Don’t Fear the Reaper,” is a perennial favorite on classic rock stations. Its intended message is that love transcends the actual physical existence of the partners. The Reaper refers to the Grim Reaper, a traditional personification of death in European folklore.

A fear of funeral planning equates to fear of death. Those who hold fear in one area of their lives often have fear in other areas. It won’t kill you to move away from the fear of funerals.

Act with love, plan ahead, and talk about what you might want. Your courage will help your family reduce stress at a time of grief, save money, and create a meaningful, memorable “good goodbye.”

On Create a Great Funeral Day, don’t fear the Reaper. Need more cowbell.

With age comes wisdom and often, vulnerability. While aging is inevitable, it’s often hard to face as previously routine tasks become more difficult or require the assistance of another. Suddenly, keeping up with the latest technology overwhelms an individual who abandons the project in frustration. Minds become addled and scam artists more creative making recognizing a scam more difficult. As a cruel backdrop to this increased vulnerability, once dutiful children seldom visit and outings with friends become sporadic. Loneliness ensues only exacerbating the helpless feelings that may accompany aging. These factors together with the continued global pandemic and our increased reliance on technology to connect create the perfect storm for exploitation of the elderly. Studies show that one in ten people over the age of 60 has experienced some form of abuse. Our aging population has never been more vulnerable, and we have a duty to protect them.

Unfortunately, abuse occurs and often isn’t discovered until months or years later, in some cases much too late to take corrective action. Telephone and mail scams jump to mind as examples of rampant elder abuse; however, sometimes the abuse comes from much closer sources. A family member, long-time friend, or even a trusted caregiver may take advantage in a needy situation. These individuals may rationalize their behavior because of their increased presence in the elder person’s life. If that individual provides access to certain necessities like rides to the doctor or helps with groceries, the situation becomes more complex and ripe for abuse. Pick up any newspaper, magazine, or browse the headlines online and you can find a story about the exploitation of the elderly. It has become an increasingly common, although preventable, occurrence.

Obviously, it’s hard to attribute the issue to just one cause. Usually, several factors lead to an abusive situation. As the following example illustrates, it’s a slippery slope. Assume that Denise took over check-writing duties to ease the emotional burden on her newly widowed mother, Molly. Molly expresses her immense gratitude for Denise’s help and tells her that she’d like to thank her and offers to pay tuition for her grandson, Graham. If Denise refuses the offer, it’s clear that she has done nothing wrong. Here Denise had the opportunity to use funds for her own benefit but refused. Perhaps Denise’s sense of duty prevented her from stroking the check, perhaps she knew that she lacked the legal authority, or perhaps she simply wanted to avoid a fight with her brother after her mother’s death.

Assume that several months pass and Denise moves Molly into Denise’s home because Molly started wandering the neighborhood. Although there are times that Molly sounds like herself, at others she’s elsewhere. The next time Molly mentions Graham’s tuition, Denise writes the check immediately. Here, it’s a little less clear whether Molly really intended for Denise to use the funds and whether Denise had the authority to write the check. That depends upon whether Denise was listed as a co-owner on the account or was acting pursuant to authority granted under a property power of attorney or as successor trustee under a trust. Even if Denise were acting under a property power of attorney or trust agreement, in most states, Denise has a duty to act in the best interests of Molly. In paying Graham’s tuition, Molly likely breached that duty.

Now let’s assume that Denise has been experiencing financial trouble and decides to write the check without any direction from Molly or completes the payee on a pre-signed check. Even though Molly had previously expressed her gratitude to Denise, Denise likely lacked proper legal authority to make that expenditure and could find herself facing charges of elder abuse. If Denise made an equal distribution to her brother, Sonny, or if Denise quit her job to provide full-time care to Molly, she still likely exceeded the scope of her authority in making distributions from Molly’s account. The foregoing example demonstrates the difficulty in drawing a bright line regarding the behavior, how easily even a well-meaning individual could misstep, and the importance of protecting the elderly against this type of exploitation.

The simplest, most effective way to prevent elder abuse begins with a well-drafted estate plan. The plan should include specific powers exercisable by the fiduciary, as the attorney-in-fact, or as successor trustee. A well-drafted estate plan that specifically prohibits or provides express powers gives instructions to the fiduciary, financial institutions, and third parties about the principal’s expectations, even when the principal loses the ability to express those preferences. These clear directions mean that more people know what should happen thereby decreasing the potential for abuse.

Most states have enacted laws with significant punishments designed to prevent elder abuse. Many also have agencies designed to receive reports of abuse and intervene, if warranted. If a family member has concerns about whether dad’s new friend has nefarious intent, consult an attorney to discuss options and make sure to keep communication open and non-judgmental. Some of these scams bring feelings of shame which makes it difficult for the victim to admit what happened. An experienced estate planning or elder law attorney can help discern signs of abuse and suggest controls, checks, and balances to protect against it.

It’s important for us to look out for one another. As we continue to navigate the ongoing pandemic, we need to encourage interactions and connections with family and friends. Periodically review estate planning documents to ensure that the fiduciary appointments serve the best interests of the principal. If one of the fiduciaries has experienced a change in circumstances, consider whether naming a co-fiduciary or another fiduciary altogether provides comfort. These safeguards will help protect our most vulnerable – the elderly.

The ongoing global pandemic and recent September 11 anniversary provide us with a great opportunity to re-evaluate our goals. At the outset of the pandemic, we were forced to make drastic changes to our everyday lives. Even now, countless health care workers continue to endure long hours in overrun hospitals with insufficient supplies struggling to save lives in the face of growing admissions. Across the country and around the planet, people have looked for ways to help. Many have done that by providing food, school supplies, and making and donating masks. In the months since we were first told to shelter in place, numerous individuals have taken steps to innovate, motivate and alleviate. Many of these acts have come in the form of contributions to charity.

If you wish to make a charitable contribution to an organization involved in combating the pandemic, you have several methods from which to choose. Of course, you can give cash outright to the charity. Donating cash entitles you to a current income tax deduction for the donation, up to 60% of your adjusted gross income if you donate to a qualified public charity. If the donation exceeds 60% of your adjusted gross income, you can carry the deduction forward for up to five years. This simple and straightforward method allows you to make an impact by simply writing a check. However, you may be able to give more or have it cost less if you donate in other ways.

Giving appreciated stock or other appreciated assets will get you a deduction for the full value of the asset, up to 30% of your adjusted gross income. Note that you can deduct the full value of the asset, notwithstanding that you paid much less for it and that had you sold it, you would have incurred up to 20% capital gains, possibly the 3.8% net investment income tax, and any state income taxes. Basically, donating an appreciated asset to charity allows you to take an income tax deduction for the capital gains you eliminated by giving the asset to the charity. If you want to gift stock to a charity, simply ask the charity to provide their transfer information and relay that information to your broker with a direction to transfer the stock to the charity. This method allows you to make a direct impact with a bit of research and a few telephone calls.

If you are contemplating a considerable gift, a charitable trust may appeal to you because it allows you to benefit a charity and yourself or your family. For example, a Charitable Remainder Trust (“CRT”) pays you or your family an income stream either for life or for a term of years and at the end of the trust term, the remainder goes to charity. You receive a current income tax deduction for the value of the charity’s remainder interest, determined actuarially. You receive a current deduction even though the charity receives nothing until many years in the future when the trust term ends. The amount of the deduction varies based upon the term of the income interest, the rate of payment, and the assumed interest rate.

If you have a non-publicly traded asset to contribute to charity, you might consider a Donor Advised Fund (“DAF”). DAFs have become some of the fastest growing charitable giving vehicles. A donor can contribute cash or other appreciated assets to a DAF; however, the DAF’s ability to accept non-publicly traded assets that other qualified charities cannot accept sets the DAF apart from other charitable giving options. If a donor were to give $1,000,000 of cryptocurrency to a DAF, that donor would receive an immediate income tax deduction for the fair market value of the cryptocurrency. The DAF invests the assets which continue to grow while the donor makes recommendations for grants to any qualified public charity usually with a few keystrokes or a telephone call. Once contributed, the assets cannot be returned to the individual donor or any entity other than a charity recommended by the donor. The DAF may allow the donor to name a successor advisor to make recommendations for continued charitable giving upon the donor’s death or incapacity.

The Qualified Charitable Distribution (“QCD”) presents another option to consider if you are taking distributions from your traditional Individual Retirement Account (“IRA”). If an individual makes a charitable contribution from an IRA that does not qualify as a QCD, the Internal Revenue Code treats the contribution as a distribution and includes it in the owner’s gross income. This occurs whether it was a direct transfer from the IRA custodian to the charity or distribution to the owner who subsequently made the transfer to the charity. The owner could take a charitable contribution deduction, but only as part of itemized expenses (unless the deduction falls below $300 for an individual or $600 for a married couple). With a QCD, the owner directs the IRA custodian to transfer funds directly from the IRA to the charity. The QCD excludes the distribution from the owner’s income while satisfying the Required Minimum Distribution (“RMD”). The QCD counts toward any RMD for the year and can begin at age 70 ½ notwithstanding that age 72 now represents the beginning age for RMDs after the Secure Act. The QCD presents a powerful charitable planning tool for anyone required to take RMDs or for those age 70 ½.

Everyone who lived through September 11, 2001, shares a common experience. Although colored by our individual circumstances, we remember looking at the horrific images of destruction and misery and wondering why this tragedy occurred. Since that fateful day, Americans have flocked to churches, synagogues, mosques, and other places of worship seeking answers to questions regarding the meaning of life and the existence of suffering.

This national tragedy continues to affect all of us to varying degrees. We face similar issues in environmental calamities such as hurricanes, tornadoes, wildfires, and in personal struggles such as the COVID-19 pandemic and unexpected illnesses. In each instance, we prepare the best we can. We can prepare ourselves for these unforeseen circumstances by planning what should happen in the event a crisis strikes. Basic estate planning relieves stress at the time of crisis both for us and for those whom we love. The basic estate plan includes five documents: Property Power of Attorney, Health Care Power of Attorney, HIPAA Authorization, Will, and Revocable Trust.

Through a Property Power of Attorney, you designate an “Agent” who will make financial decisions for you when you are unable to do so. This Agent has the legal authority to act on your behalf and may be your spouse, a parent, or a trusted friend. Without this document, if you are missing or incapacitated, no one can act for you. Without it, if you were missing or incapacitated and your family needed to refinance your house to pay for bills, it could only be done by someone going to court and having you declared incompetent. Incapacity proceedings usually require the services of an attorney. That arduous process often leaves those involved emotionally drained.

A Health Care Power of Attorney designates an “Agent” to make health care decisions for you if you are unable to make them yourself. With this document in place, you can rest assured the person you trust will have the legal authority to make medical decisions for you. You also may wish to prepare a Living Will or similar document which expresses what you would want to be done regarding end-of-life decisions.

A HIPAA Authorization allows people whom you designate, such as your Agents or others, to access your protected health information. It’s through this access to your health information that the decision-makers you’ve chosen can make informed decisions.

A Will has several functions. First, and most importantly, under the laws of most states, it is the only way you can designate whom you wish to serve as guardian for your minor children. Without a Will the court will decide who will be guardian, regardless of your wishes. Unfortunately, no matter how caring the judge may be, that judge does not know and love your children as you do. Second, the Will distributes any assets that are held in your individual name at your death to your intended beneficiaries. Without a Will, the state determines how and to whom to distribute your assets under the laws of “intestate succession.” Unfortunately, this set list ignores your specific circumstances and assets often do not go to the desired person or in the desired manner. Third, the Will names someone as your Personal Representative or Executor to carry out the instructions set forth in your Will. Certain types of Wills, called pour-over Wills may “pour” your assets “over” into a Revocable Living Trust (“RLT”), to be distributed by its terms.

Even with a Will, any assets you own at death must go through “probate” to be distributed to those designated by you. Probate is the process of transferring title from the person who died to the person who has the right to receive the property. Depending upon the state and the situation, this process can be expensive, time-consuming, and emotionally draining for those left behind.

Setting up an RLT to hold legal title to your assets during your lifetime avoids probate. The RLT acts as a Will substitute upon your death and vests the successor Trustee with the legal authority to collect assets, pay your debts, expenses, and taxes, and dispose of the assets as set forth in the RLT. As a result, the assets avoid probate because the RLT owns the assets and the trust did not die. Even though the RLT holds legal title to the assets, you retain complete control of the assets during your lifetime and can make changes to the RLT. If you become incapacitated, the person you have chosen as your successor Trustee will manage the assets for you, much like the Agent under your Property Power of Attorney. The RLT provides great flexibility in allowing you to direct how and when the assets will be used after your death. For example, you can include provisions that ensure your children do not squander money but, rather, keep the money for higher education.

Finally, as part of your estate planning, you need to consider how other assets will pass upon your death. Periodically review the beneficiary designations on your 401k, IRA, or other qualified plan assets. Often, circumstances change, and you need to update your beneficiary designations to change with the times. This becomes increasingly important as retirement assets comprise a larger and larger portion of the typical person’s assets. Periodically, you should review the beneficiary designations for life insurance and any other assets which transfer automatically at death. Many financial accounts have such designations.

Unfortunately, we cannot eliminate the possibility of tragedy in our lives. However, we can reduce our anxiety at such times with a comprehensive estate plan that provides instructions to our loved ones regarding what should happen if tragedy occurs. This article reviewed the basic documents. Other considerations such as beneficiaries with special needs, creditor protection, income taxes, divorce protection, and estate taxes impact your plan. 

While judicial and nonjudicial modification and decanting derive from state law, trust protector provisions originate from the trust instrument itself and by extension, from the grantor. The grantor decides which powers to give a trust protector. For example, the trust protector may possess the power to remove and replace a trustee or appoint additional trustees; to direct, consent, or veto investment decisions; to modify the trust in response to changes in tax or state law; to change governing law or situs; to appoint assets to a class of people or charity in a non-fiduciary capacity; to alter beneficial interests in the trust; to modify the trust in response to changes in trust assets; or to turn off grantor trust status. Think about the trust protector as someone who fixes a specific issue only and has no input regarding daily trust administration.

You may be wondering how a trust protector differs from a trust advisor, distribution advisor, or special trustee. The powers given, rather than the name used, determine whether the party is a trust protector. Trust protectors have a limited but vital role and maintain the power to adjust the trust in the future, long after the creation of the trust and perhaps, after many generations when the trust needs a quick fix. Any time you change an irrevocable trust, ensure that there are no unintended tax consequences, either to a beneficiary, or the grantor.

While it is tempting to think of a trust protector as a trustee, remember that the trust protector may not have the same fiduciary duties as the trustee. State law determines whether trust protectors have fiduciary duties. Some states, like Missouri, have statutes that presume that the trust protector is a fiduciary but allow the grantor to override that presumption in the trust instrument itself. Other states, like Alaska, impose the reverse presumption that a trust protector is not a fiduciary and require that the trust protector be made a fiduciary in the trust itself, if desired. Remember to consider the interplay between the trustee and the trust protector, especially if you intend for the trustee to take direction from the trust protector.

Donald established a trust for the benefit of his nephews, Huey and Dewey, naming his nephew, Louie, as trustee and Webby Vanderquack as trust protector. Louie makes distributions to Huey and Dewey in his sole discretion, for the lifetime of each of Huey and Dewey. Huey, Dewey, and Louie recently had a falling out over rights to their latest movie. Louie threatens to withhold distributions to Huey and Dewey. Webby, as the trust protector, can remove Louie and replace Louie with Donald’s friend, Mickey. In this situation, the trust protector exercises her power to name a new trustee who will resume distributions to the beneficiaries without the current trustee’s cooperation and without court intervention thereby solving the issue. This is but one example of the many ways that a trust protector can exercise her listed powers and fix the trust to better address beneficiary needs.

If you have concerns about how an irrevocable trust can adapt to changing needs over time, consider naming a trust protector who can adjust the trust to account for changes in beneficiaries’ needs or changes in the laws. Trust protectors avoid court, do not require the cooperation of the trustee or beneficiaries, and can solve a problem quickly. The use of a trust protector adds flexibility to a trust, especially when limitations or obstacles prevent judicial and nonjudicial modification or decanting. Remember that the trust protector has the powers listed in the trust. With some careful consideration of the trust protector’s powers, it’s easy to create an irrevocable trust that will evolve with changing needs.

Have you ever wondered what information they need to create a moving, memorable memorial service or funeral? You can use this checklist of questions to have answered BEFORE a loved one dies. Many of these questions are directed to “you,” but you can direct them to someone else.

Have arrangements been made for cremation or burial with a funeral home/cemetery, cremation service provider, or body donation service?

What is the contact information for that (those) service provider(s)?

If arrangements have been made, has funding been provided through insurance (pre-need, final expense, or other), a payable on death account, or some other method?

These next questions cover the Five W’s: the Who, What, When, Where, and Why of holding a memorial service — important details that will help make a memorable, meaningful, moving event.

Who do you want to conduct a celebration of life, memorial service or funeral? That could be trusted clergy, a celebrant, a talented friend or relative, or another special person. What is their contact information?

Who else do you want to speak at this event about your life? Would you want to honor specific people by inviting them to participate in another way, such as singing, dancing, playing music, or reciting a reading?

Who needs to be invited to your life celebration and what is their contact information?

What organizations need to be contacted to alert fellow members and friends about the memorial service?

What — if any — organization(s) would you have people support with memorial donations in lieu of flowers?

What three or four pieces of music are meaningful to you and why? Would you want a musician to play a particular instrument as part of the event?

What poems, prayers or other readings have significance for you?

What motif or theme best represents your life? Items reflecting your values, hobbies, and handiwork can be on hand at the event, and even given away to attendees as memorial gifts.

What are your favorite colors and flowers (if any)?

What words of wisdom would you want to share with those who want to celebrate your life?

What do you want done with your remains, if cremation is your choice? (Saying you don’t care isn’t helpful.)

When would be a good time to celebrate your life? Would you want to associate this event with a particular holiday or time of year? Does your family need to coordinate travel around school schedules?

Where do you want to hold your life celebration event? If you are religious, would you want it held in your congregation’s house of worship? If you aren’t religious, what meaningful places could accommodate a ceremony and a party?

Why is a specific location for your life celebration important to you?

What other details might you wish to specify? To provide particular foods or drinks? Have a balloon release or candle-lighting ceremony? Gifts to give the guests?

Do you have any special requests for guests attending your life celebration? Some suggestions – dress in a particular color or style of clothing, bring a donation for a charity, or bring a story or photo to share at the event.

Unlike judicial and nonjudicial modification or the use of a Trust Protector, decanting relies upon an extension of the trustee’s existing power to distribute trust assets.  In states that recognize decanting, the trustee exercises their power to distribute trust assets and moves them from a trust with unfavorable terms to a trust containing more favorable terms, much like pouring wine from the bottle into a decanter brings better flavor to the wine.

Depending upon state law, the new trust could provide opportunities to correct a drafting mistake, clarify ambiguities, correct and update trust provisions, remedy problems in administration, change trust situs, expand or limit trustee powers, restrict beneficiaries’ rights to information, provide asset protection, adjust trustee succession, appoint a trust protector, alter distributions, or adapt trust provisions to address changes in beneficiaries’ circumstances.  Over half of all states have enacted statutes authorizing decanting.  Each state’s statutes regarding decanting vary widely, although most recognize that if a trustee has discretionary power to distribute trust corpus to the beneficiaries, such power constitutes a special power of appointment enabling the trustee to appoint the trust corpus to a new trust for the benefit of those same beneficiaries.

Even if your state statutes do not specifically authorize decanting, you may still have options.  If the problematic trust allows for a change in situs, then the trustee or other authorized party can utilize that provision to move the administration of the trust to a state that allows decanting.  Once the trustee changes situs, then the trustee can take advantage of the new state’s decanting statutes.  Most states that allow decanting have adopted some form of the Uniform Trust Decanting Act. Note that experts tend to cite South Dakota as the state with the most favorable decanting statute.

Let’s review an example to see the practical application of decanting.  Assume that Donald established a trust for the benefit of his nephews, Huey, Dewey, and Louie naming Webby Vanderquack as Trustee (Webby is an independent trustee because she is not related or subordinate to Donald).  Webby makes distributions to Huey, Dewey, and Louie in her sole and absolute discretion and the terms of the trust provide for outright distribution to each of Huey, Dewey, and Louie in a few years.  Huey recently became disabled and receives government benefits.  Huey has expressed concern that he will lose his benefits if he receives the trust assets outright.  Dewey just finished his third stint in rehab and Louie is in the middle of a nasty divorce.  Webby proposes to decant the trust assets to a new trust that contains a special needs trust for Huey’s benefit and lifetime trusts for each of Dewey and Louie.  This new trust provides additional protections for Huey, Dewey, and Louie, based upon circumstances that Donald could not have reasonably anticipated when he established the trust.  This is but one example of the myriad ways that decanting allows the Trustee to create a new trust that better addresses the beneficiaries’ needs without unfavorable tax consequences.

If you think that decanting might provide a solution for your trust troubles, make sure that you consult a qualified Estate Planning attorney regarding your state’s decanting rules.  The trustee needs to comply with their fiduciary duties which becomes more difficult if the trustee occupies the dual role of trustee and beneficiary.  You want to ensure that you avoid unintended tax consequences to the grantor and beneficiaries.

Decanting provides a great estate planning opportunity in the current environment.  Clients alike are encouraged to review their plans, especially irrevocable trusts created many years ago to confirm that those trusts accomplish the goals of the grantor and properly protect the needs of the beneficiaries.  If the trust fails to properly address beneficiary needs or otherwise could use some tweaking, decanting provides a great opportunity to re-write the trust with more favorable terms.

Sometimes circumstances change in ways you never anticipated when signing your irrevocable trust. While you cannot reverse time, there are a few ways that you might be able to modify an irrevocable trust.

Many think that an irrevocable trust cannot be modified, amended, or terminated without great difficulty. While that may have been true years ago, that’s no longer the case. If you want to modify an irrevocable trust, you have several options to consider. An experienced estate planning attorney can decide on the best course after consideration of your unique circumstances.

For the thirty-five states that have enacted the Uniform Trust Code (“UTC”), section 411(a) allows a trustee, beneficiary, or the grantor of the trust to bring an action to modify such trust if the grantor and all beneficiaries agree, even if the modification violates a purpose of the trust. This powerful provision allows the parties to re-write the trust if everyone consents. Section 411(b) of the UTC allows modification without the grantor’s consent or, in the case of a deceased grantor, if the proposed modification is not inconsistent with a material purpose of the trust. Lastly, section 411(e) of the UTC allows modification over the objection of a beneficiary if such modification is not against a material purpose of the trust and if adequate protections exist for the objecting beneficiary.

Even in the fifteen states that have not enacted the UTC, it may be possible to bring an action to modify an irrevocable trust. For example, some non-UTC states have statutes similar to those of UTC states and allow modification if the objecting party has adequate protection. Review your state’s statutes to determine whether a judicial modification is an option and if so, the requirements for modification.

For those looking for a less expensive and faster way to modify trusts, section 111 of the UTC allows interested persons to enter into a nonjudicial settlement agreement (“NJSA”) as to any matter involving a trust. The agreement cannot violate a material purpose of the trust and must include terms and conditions that could be approved by the court. The UTC limits the matters resolved by an NJSA; however, interested parties have broad latitude in the use of an NJSA to resolve trust matters. Some non-UTC states such as Delaware, Idaho, Illinois, and Washington have adopted statutes allowing the use of NJSAs. Ultimately, reviewing proper statutes, determining the interested parties, and confirming allowable modifications are threshold questions to the inquiry.

Let’s review an example to see how this might work. Mike set up an irrevocable trust for the benefit of Greg, Peter, Bobby, Marcia, Jan, and Cindy naming Carol as trustee and Alice as successor trustee. Mike and Carol subsequently divorced and pursuant to the terms of the trust, Carol was removed as trustee and Alice began serving. Unable to deal with the loss of her job when Mike and Carol divorced, Alice begins making questionable decisions, including investing trust assets in a failing cleaning company. Mike dies shortly after his divorce from Carol. Greg, Peter, Bobby, Marcia, Jan, and Cindy all live in a UTC state and decide that Alice has failed in her duties as trustee. They wonder if the use of an NJSA could remove Alice and appoint Carol as trustee in her place. Alice has agreed to resign and Carol’s appointment does not violate a material purpose of the trust, thus the parties can use an NJSA to appoint Carol as trustee in place of Alice.

For UTC and non-UTC states alike, multiple options exist to modify an irrevocable trust. Given the current high exemption and possible changes to the tax code, now is a great time to review existing estate plans that include irrevocable trusts. Using judicial or nonjudicial modification can add flexibility to those trusts to account for changed circumstances. For advisors with clients desiring to make changes to their irrevocable trusts, review local statutes to determine whether court approval is required or whether an NJSA will work. For those properly motivated, these methods provide certainty and an opportunity to achieve tax benefits, provide asset protection, and other potential benefits.

When a taxpayer makes a charitable gift, typically they get an offsetting charitable income tax deduction. However, sometimes it doesn’t end up reducing their taxes. Normally, in order to take a charitable income tax deduction, the taxpayer needs to itemize their deductions. However, if the charitable contribution and other itemized deductions don’t exceed the standard deduction amount, it makes sense to take the standard deduction and forego the itemized deductions.

For example, Charlie Charitable has taxable income of $100,000 each year. He is a single taxpayer and his standard deduction amount is $12,550 (in 2021). He has $10,000 of state and local taxes (an itemized deduction). In addition, he makes a charitable contribution each year of $2,500 to his alma mater. His itemized deductions would be $10,000 plus $2,500 = $12,500, i.e., less than the standard deduction amount of $12,550. It doesn’t make sense for Charlie to itemize his deductions since they would be less than the standard deduction he could take without itemizing.

A taxpayer could do several years’ worth of gifts in one year, thus pushing past the standard deduction amount. Then the taxpayer could make no charitable contributions in the “off” years and still take the standard deduction amount.

In our example, Charlie could make a charitable contribution of $10,000 in 2021. He’d have total itemized deductions of $20,000. This would save him the tax on $20,000 (his itemized deductions) less $12,550 (the standard deduction) = $7,450. Assuming he’s in a combined state and federal bracket of 40%, that would result in savings of nearly $3,000. In the “off” years of 2022, 2023, and 2024, he’d take the standard deduction amount each year and the strategy would not impact his taxes in those years. In 2025, he could repeat the large charitable contribution for another itemized deduction.

When Charlie makes the large contribution, he could make it to a Donor Advised Fund (“DAF”). He would get the income tax deduction in the year he makes the contribution, but he wouldn’t have to distribute the money from the DAF to the charity that year. He could recommend grants from the DAF to any public charity he desires. So, he could continue distributions to his alma mater, if he wished. But Charlie could decide to switch to a different charity. In the interim, Charlie could invest the funds as he determined was appropriate prior to their distribution to a charity.

A DAF can be used with other strategies. For example, Charlie could give his appreciated publicly-traded stock to the DAF. With that strategy, Charlie would get an income tax deduction for the full value of the appreciated stock, even though he never paid tax on the gains.

For example, let’s say the $10,000 Charlie gave to the DAF was in the form of a publicly-traded stock which was worth $10,000 but which Charlie bought for only $1,000. If Charlie had sold the stock, he would have had to pay tax on the $9,000 gain. Assuming a state and federal combined capital gain tax rate of 30%, he’d owe $2,700 on the gain. If he then contributed the proceeds to charity, he’d only have $7,300 to contribute to charity. By giving the appreciated publicly traded stock directly to the charity (or DAF), he would get even more bang for his charitable donation.

A DAF can be a great way to complement a charitable giving strategy. It allows one to maximize the tax benefit from charitable giving, while retaining a say over the timing and recipient of the money.

Sometimes, a family will have land and they want to keep it just the way it is. They don’t want the land developed. They want the family to continue to farm it just as they have for generations.

In the right circumstances, a charitable conservation easement can be a useful tool to help achieve this goal. The donor must be willing to put an easement on the property in perpetuity. The easement prohibits development but allows prior use, like farming. There are many more requirements which must be navigated. The charitable income tax deduction is spelled out in IRC section 170(h)(5)(A). If the land qualifies, the deduction is for the difference in the value of the land before the easement and the value of the land subject to the easement. (There may also be an estate tax exclusion available under section 2031(c) in addition to the property’s reduced value.)

Let’s look at an example:

The Smith family came from Europe to the United States three generations ago. They settled on a farm. They’ve been growing crops and raising livestock on the land ever since. Bob Smith is the current owner of the Smith farm. He’s getting up in years. Things have really changed since he was a boy. The farm used to be a two-hour drive from a major city. After new highways and suburban expansion, the farm is now surrounded by houses on three sides and is adjacent to a state park on the fourth.

As a farm, his land is worth about $1 million. Due to development pressures, the land would now sell for $2 million. Bob wants to keep the land in the family.

Assuming the land qualifies, if Bob places a conservation easement on the land, he and his family could continue to keep farming as they have for three generations. They just couldn’t develop the land. In exchange, they’d get a charitable deduction for the $1 million reduction in value. As with other charitable deductions, it would be subject to limitations based on Bob’s income, but the excess could be carried forward for five years. Once the land is subject to the easement, it’s fair market value would be lower in his estate at his death. It may even lower his property taxes, though that depends upon his local taxing authority.

Perhaps the biggest benefit to Bob is that his children won’t be pushing him to develop the land anymore!

A conservation easement may be a great way to achieve your goals while reaping tax benefits, too. However, be sure to avoid promoters pushing the abusive transactions laid out by the IRS in Notice 2017-10.

Estate Planning is about far more than documents. It’s also about the knowledge and experience of the attorney who drafts the plan.