Wills, Trusts & Estates
Law Office of Steven M Berger, LLC


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Trust Taxes

Baltimore Marriott Waterfront OutsideIn August I attended an Advanced Estate Planning Conference put on by the American Institute of Certified Public Accountants. You may wonder why an attorney would spend three days listening to speakers talk about taxes. The reason is that taxes are a key factor in estate planning. Estate taxes, income taxes, and capital gains taxes all must be factored into an estate plan. The number of estates subject to the Federal Estate Tax has been greatly reduced by the $5,000,000 permanent exemption adjusted annually for inflation. Maryland residents still have to deal with an estate tax up to 16% on assets over $1,000,000. For many families the capital gains taxes on highly appreciated assets can be a greater burden than the Maryland estate tax. The top Federal rate on capital gains is 20% + 3.8% Medicare surcharge + 5.5% Maryland tax puts the effective rate on capital gains near 30%. Trust tax rates are another key concern to estate planning attorneys. Estate income is taxed at trust rates. Federal trust income tax rates reach 39.6% after $11,950 of income. The seminar included tips on how and when trust income can be passed to a beneficiary using a schedule K-1. The income is then reported on the individual taxpayer's tax return and often results in less taxes being due. In summary, I found the AICPA professionally rewarding. The interaction with accountants from around the country was truly enlightening. The perspective I gained is part of how I distinguish my estate planning practice from others in the field. Furthermore, the location in downtown Baltimore proved to be a chance to showcase our area's attractions, sights, and great seafood.