New Medicare tax creates trustee dilemma

June 2013


Trustees and beneficiaries have a new tax to contend with; the Net Investment Income Tax (also known as the Medicare Contribution Tax or Section 1411 tax). Trusts that own business interests have special reasons to be concerned about this new tax which will require trustees to know the income tax situation of each beneficiary. Therefore, beneficiaries should expect questions about their financial situation from their trustee.

The key is how best to position the trust for minimum overall tax on the combined trust and beneficiary group.

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