1. What are dynasty trusts?
Most trusts — bank accounts held by one person, a trustee, for the benefit of another person or group — come with expiration dates. A few states, including Delaware and South Dakota, permit trusts to last forever. People from across the U.S. can open dynasty trusts in these states.
2. Why are they getting popular now?
The tax overhaul of 2017 doubled — to $11.2 million for an individual and $22.4 million for a married couple — the amount that can be passed to heirs without triggering estate and gift taxes. However, these higher thresholds are only in place until 2025 giving the rich a potentially limited opportunity to pass more wealth to family members tax-free while also exerting some control over how heirs spend their inheritances.
3. Why use a trust in the first place?
Trusts protect assets from creditors and former spouses. They can enable clever financial maneuvers that maximize the estate and gift-tax exemption. And trusts give donors some control over how the money is spent. For example, a donor can limit withdrawals so money can only be used for college, to purchase a home, or other specific purposes.
4. Why choose a dynasty trust?
Under the previous estate tax limits, many wealthy Americans already had set up trusts for the benefit of their children. If you wish to make your grandchildren or great-grandchildren rich, a dynasty trust can make that easier.
5. How do they work?
They can be funded with cash, stock or other assets, and structured to pay each generation only some of the trust’s proceeds while the rest of the money grows free of estate and gift taxes. While trusts or their recipients generally need to pay taxes on income and gains, they don’t owe capital gains taxes until assets are sold. With the right planning, a trust funded up to the maximum threshold tax exemption amount could be worth far more than that.
The following new laws become effective in Arizona on August 9, 2017:
The Motor Vehicle Division cannot suspend the licenses of those who fail to respond to their citations.
Dog racing is now illegal across the state.
For spouses or dependents of military members killed in the line of duty, free car registrations become available.
The minimum wage will be increasing for workers, who can now expect $10 an hour.
Homeowners with short-term rental homes on sharing websites like Airbnb and Homeaway will now have state taxes collected from the companies. The website companies will then forward the taxes to the Department of Revenue.
In upcoming elections, pamphlets must be mailed to every household with registered voters showing what will be on the ballots.
Got one of those plastic covers on your license plate to thwart photo radar? They are now illegal.
Other laws range from expanding who can teach in Arizona classrooms and when police need warrants to track cell phones to exactly how much of someone’s foot a podiatrist can amputate (it’s a toe — not a foot).
Legislation to bar the state’s newest drivers from using cell phones does not take effect until July 1, 2018.
And a bill to set up procedures for people to argue about what they are charged by out-of-network hospitals does not become law until Jan. 1, 2019.
Arizona’s new law mandating paid sick leave starts July 1. Businesses and non-profit groups could face penalties for failing to keep records, post notices and could incur damages for failing to provide paid sick time. Employers who retaliate against workers exercising their rights could face fines of at least $150 per day.
The law mandating as many as 40 hours of paid sick leave, which was approved by voters in November of 2016 that also raised the state’s minimum wage, applies to almost all businesses and non-profits with at least one Arizona employee including entities not headquartered in the state. The only exceptions are those employed by Arizona’s state or federal government and sole proprietors. So, whether full-time or part-time, temporary or seasonal, all will receive paid sick time. They will be able to use this benefit for a variety of reasons.
The minimum requirements are 24 hours of paid sick time off annually for businesses with 14 or fewer workers, or 40 hours off for entities with 15 or more people. Employees are entitled to receive paid sick-time off; independent contractors are not. The general rule is that if you issue a W-2 to a worker, that person is an employee entitled to the benefit.
The law allows paid leave for various reasons besides sickness or injury such as domestic violence, sexual abuse, stalking or the closing of a child’s school owing to a public health emergency. Additionally, reasons include taking time off to meet with an attorney, arranging shelter services or securing safe housing, as well as issues on behalf of family members. The definition of family members is quite broad including siblings, grandparents, in-laws and others. Significantly, an employer can request proof or documentation only after a worker has been absent for three days in a row. And, when proof is required, it can come in a variety of forms such as a doctor’s note, a police report, a letter from an attorney or simply a worker’s own statement that he or she needed time off. Employers generally will be required to grant the time off. Penalties and damages await companies that ignore the new law.
Nine states are making estate tax changes for 2017. Altogether, eighteen states plus the District of Columbia impose either estate or inheritance taxes or both. They are Oregon, Washington state, Minnesota, Illinois, New Jersey, New York, Vermont, Hawaii, Kentucky, Nebraska, Iowa, Maryland, Pennsylvania, Connecticut, Massachusetts, Maine, Rhode Island, and Delaware.
As an example, New Jersey has had a long time $675,000 exemption from the state estate tax but now it will be $2 million dollars. Similar changes are in effect for the other states. Because the federal estate tax exemption amount is indexed to inflation, it rose from $5.45 million dollars for 2016 to $5.49 million dollars in 2017. So, for a married couple the exemption amount is a little shy of $11 million dollars.
How much money you can leave to your heirs free of state tax levies depends on where you live and own property, whom you’re leaving your money to, and whether your estate planning is up to date. Any doubt about this, please see an estate planning attorney for assistance.