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Monthly Archives: January 2016

Be Prepared for Stricter Scrutiny of Employee Benefit Plans in 2016 by Lisa Interian, CPA

Posted on January 25, 2016 by Lisa Interian

Sponsors of employee benefit plans will need to take on more responsibilities to keep up with heightened regulatory scrutiny in 2016. Included in a list of priorities recently issued by the Internal Revenue Service (IRS) is a narrow focus on internal compliance controls of the “operation and form” of employer-sponsored retirement plans. According to the IRS, some of these benefit plans have a “historical pattern of non-compliance” and will therefore become subject to limited Employee Plans Team Audit (EPTA) audits, which will help the IRS determine if a more comprehensive audit is required.

With this in mind, retirement plan sponsors should respond promptly to EPTA notices from the IRS and take action to voluntarily correct any plan errors to avoid a more intense and expanded IRS examination. Moreover, sponsors should make every effort to keep up with evolving regulations that impact the way in which they administer their plans and protect participants’ investments. Following are just some of the issues that are coming under increased regulatory scrutiny.

Know Your Fiduciary Responsibilities and Document Your Actions

In a unanimous decision, the Supreme Court in 2015 reaffirmed that businesses sponsoring 401(k) plans have a fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) to prudently monitor investments, dispose of inappropriate assets and minimize management plan fees on a continuous and regular basis that may extend beyond the six-year statute of limitations. The key takeaway from the Tibble v. Edison decision is a reminder of the important role plan sponsors play in overseeing all aspects of their retirement benefit plans. While the Court declined to list all of a fiduciary’s responsibilities, sponsors should take special care in the hiring of well-vetted and qualified third-party administrators, auditors and other consultants charged with fiduciary duties. Failing to meet these responsibilities may put plan sponsors at risk of being held personally liable for their actions or inactions. Take time to understand all your fiduciary responsibilities, seek advice of qualified advisors and document key decisions to support your compliance.

Choose a Qualified Auditor

Among concerns recently expressed by the Department of Labor is a high deficiency rate for employee benefit plan audits. These issues can jeopardize a plan’s compliance with reporting and disclosure standards established by the Employee Retirement Income Security Act of 1974 (ERISA) and put plan assets in danger.

Federal law requires that plans with 100 or more participants hire an experienced, independent, certified or licensed accountant to conduct an audit of their financial statements and the integrity of their plan’s financial assets. The DOL found a direct correlation between the auditor’s experience and the rate of deficiency, noting that CPAs performing the fewest number of employee benefit plan audits annually had a 76 percent deficiency rate.

In order for to meet the unique audit and reporting requirements of employee benefit plans, the Department of Labor advises that plan administrators select a CPA with the knowledge, experience and expertise that conforms to professional auditing requirements. Among its recommendations, the DOL urges plan sponsors and administrators to consider the following factors when assessing a CPA’s qualifications:

  • The number of employee benefit plans the CPA audits each year, including the types of plans;
  • The extent of specific plan audit training the CPA received;
  • The status of the CPA’s license with the state board of accountancy;
  • Whether the CPA has been the subject of prior DOL findings or referrals, or has been reported to a state board of accountancy or other agency for investigation; and
  • Whether the CPA’s employee benefit plan audit work has been peer reviewed and whether such a review resulted in negative findings.

As sponsors of employee benefit plans, businesses are responsible for administrating all aspects of their plans, including ensuring promised funds will be available for employees. Hiring an auditor to conduct a quality audit is a fiduciary duty that businesses should address with special care to avoid personal liability for failure to complete and file accurate annual returns.

Know What Has and What Hasn’t Changed as to Annual Filings

Included in the recently enacted Fixing America’s Surface Transportation (FAST) Act of 2015, is a repeal of a provision enacted in July that extended filing deadline for sponsors of calendar year employee benefit plans. Effective immediately, the maximum extension for filing Form 5500 will go back to October 15, two-and-a-half months after the general filing deadline.

Navigating the complexity of retirement plan compliance and enforcement is a difficult task that plan sponsors should undertake only under the guidance of experienced advisors.

Berkowitz Pollack Brant and its affiliate Provenance Wealth Advisors (PWA) have an experienced and qualified employee benefit plan service team that works with businesses of all sizes and across all industries to meet the rigorous compliance issues associated with establishing, maintaining and auditing employee benefit plans.

About the Author: Lisa N. Interian, CPA, is an associate director of Audit and Attest Services with Berkowitz Pollack Brant, where she performs retirement plan audits and works with privately held companies in a range of industries to meet their reporting and compliance needs. She can be reached in the CPA firm’s Miami office at (305) 379-7000 or via email at


IRS Lowers Standard Mileage Rates for 2016 by Kenneth J. Strauss, CPA/PFS, CFP

Posted on January 22, 2016 by

The IRS has reduced the optional standard mileage rate for employees and self-employed taxpayers who use their cars for business use in 2016 to 54 cents per mile, down from 57.5 cents in 2015. Similarly, as gas prices have declined, so too has the deductible costs for mileage taxpayers drive for medical and moving purposes. In 2016, taxpayers may deduct 19 cents per mile driven for moving or for transportation to and from medical appointments, a four cent decrease from 2015.


The standard mileage rate does not apply to taxpayers who claim accelerated depreciation on a vehicle nor to fleet owners that use more than four vehicles simultaneously. Personal use of a vehicle for charitable work remains unchanged at 14 cents per mile in 2016.


About the Author: Kenneth J. Strauss, CPA/PFS, CFP, is a director with Berkowitz Pollack Brant’s Tax Services practice. He can be reached in the CPA firm’s Fort Lauderdale, Fla., office at (954) 712-7000 or via email


About the Author: Kenneth J. Strauss, CPA/PFS, CFP, is a director with the Taxation and Personal Financial Planning practice of Berkowitz Pollack Brant, where he works with entrepreneurs and multi-generational family businesses to develop tax-efficient estate, succession and financial plans.   He can be reached in the CPA firm’s Fort Lauderdale, Fla., office at (954) 712-7000 or via email


The 4 Cs of Financial Advisor Credentials by Todd Moll, CFP, CFA

Posted on January 21, 2016 by Richard Berkowitz, JD, CPA

Some financial advisors have so many acronyms attached to their names, it is often difficult for consumers to understand what those credentials represent. Deciphering this alphabet soup of designations and weeding out those that are mere marketing tools is but one step consumers should take when selecting a financial planning advisor.

More importantly, consumers should ask questions and consider a financial planner’s competency, including his or her experience, licensures, fee transparency, a clean complaint record and good references.

CFP®. A CERTIFIED FINANCIAL PLANNER™ has fulfilled education requirements relating to investment, retirement, estate, tax and insurance planning and passed the CFP® exam. A CFP® professional must have a minimum of three-years of experience and provide fiduciary duties in accordance with highest ethical standards required by the CFP board.

ChFC®. Certified Financial Consultants have completed more than 400 hours of financial-planning courses and maintain a minimum of 30 hours of continuing education study every two years. Use of the ChFC® designation is governed by the Certification Committee of the Board of Trustees of the American College of Financial Services, which requires Certified Financial Consultants adhere to strict ethical guidelines.

CLU®. Certified Life Underwriters have completed more than 400 hours of course works covering all aspects of insurance planning, estate and retirement issues, taxation and risk management.

CFA®. Chartered Financial Analysts have demonstrated in-depth knowledge of the securities industry and experience in portfolio management, investment analysis and the ability to make informed investment decisions.

The professionals with Provenance Wealth Advisors have decades of experience honing their skills and serving as trusted advisors to help individuals develop comprehensive estate, financial and business plans that meets short-term needs and long-term goals.

About the author: Todd A. Moll, CFP®, CFA, is a director and chief investment officer with Provenance Wealth Advisor, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants. He can be reached at (954) 712-8888 or via email at

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Securities offered through Raymond James Financial Services, Inc., Members FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that using an advisor will produce favorable investment results.

PATH Act Includes Provisions that Affect Foreign Investment in Real Property by James W. Spencer, CPA

Posted on January 19, 2016 by James Spencer

In addition to extending many beneficial tax provisions to U.S. taxpayers, the Protecting Americans from Tax Hikes Act (PATH Act) signed into law in December 2015 also signals significant changes to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).


Changes to Withholding Rates


Under the 2015 PATH Act, the FIRPTA withholding rate increases from 10 percent to 15 percent on sales of real property by foreign entities and nonresident aliens, including dispositions of United States real property interest (USRPIs). Because the increase applies to sales that occur on February 16, 2016, or later, foreign taxpayers that have already entered into contracts on sales of real property may consider accelerating the closing date to no later than February 15 in order to limit their FIRPTA withholding tax.


In addition, the Act reduces the FIRPTA withholding rate from 15 percent to 10 percent on dispositions of certain property acquired by a transferee who uses the property as a residence.  The reduced rate applies to property sales that do not exceed $1 million and for which the exemption for a residence bought for $300,000 or less does not apply.


Additional Modifications


In additional to the withholding changes under FIRPTA, the PATH Act includes the following benefits for foreign investors in U.S. real estate:

  • An expanded FIRPTA exception for dispositions of stock in publicly traded real estate investment funds (REITS),
  • a new FIRPTA exception for certain qualified shareholders of REITS,
  • a new FIRPTA exemption for certain foreign retirement and pension funds,
  • a permanent extension of the treatment of certain regulated investment companies (RICs) as qualified investments that escape FIRPTA withholding, and
  • new rules to determine whether a REIT or RIC is domestically controlled and therefore exempt from FIRPTA tax upon disposition of stock.


To take advantage of the PATH Act provisions as they related to foreign investment in U.S. real estate, foreign investors, real estate investment trusts (REITs) and private equity funds investing in U.S. real estate should seek the counsel of tax professional experienced in such matters.


About the Author: James W. Spencer, CPA, is a director with Berkowitz Pollack Brant’s International Tax Services practice, where he focuses on a wide range of pre-immigration, IC-DISC, transfer pricing and international tax consulting issues for individuals and businesses. He can be reached at the CPA firm’s Miami office at 305-379-7000 or via email at

Non-Profits Must be Aware of Nexus-Creating Activities to Minimize State Tax Risks by Karen A.. Lake, CPA

Posted on January 15, 2016 by Karen Lake

An organization that qualifies for tax-exempt status on the federal level is not necessarily exempt from taxes on the state level. In fact, as state and local governments continue to step up their attempts to fill budget gaps, their attention has increasingly turned to non-profits and the taxable income these organizations generate within their geographic borders. More specifically, governments are looking to uncover opportunities where they may claim an out-of-state not-for-profit created an economic nexus within their municipalities and may therefore be subject to their state and local income, sales and use taxes. In order to minimize their exposure to these potentially costly tax liabilities, non-profit organizations must understand the concept of nexus and recognize that tax laws vary significantly from state to state.

What is Nexus?

Nexus is the minimal connection an entity must have with a state in order for that state’s government to impose and collect taxes from that organization. Sometimes nexus is clearly identifiable, such as when an entity has a physical presence in a state. Other times, nexus is more difficult to determine, especially in situations where an organization may solicit donations or sell products online. As a result, non-profits should take special care to assess their activities across borders and be prepared to pay taxes on those activities or risk losing their tax-exempt status.

Sales and Use Tax

Organizations are usually subject to sales and use tax if they have a “physical presence,” including an office location or employees, in a particular state. When an organization sells an item, such as a t-shirt, it usually collects sales tax and remits that amount to the state where the sale took place.


However, some states provide not-for-profits with tax exemption on specific sales, as long as the organization meets specific registration and reporting requirements within those states. For other states, the exemption is available only to non-profits whose sales meet specific criteria. These criteria include sales relating specifically to non-profit’s fundraising activities. Understanding the laws that vary across state lines can represent a combined state and local tax savings as high as 10.25 percent.


Income Tax

Many not-for-profit organizations generate unrelated business income (UBI) from activities they perform on a regular basis that are “not substantially related” to furthering their charitable, educational or other tax-exempt purposes. When this is the case, the entity may be creating a tax nexus that will subject it to state-sourced unrelated business income taxes on the net proceeds in excess of $1,000 as well as stringent application, filing and reporting requirements specific to that individual state. Even when a non-profit does not have UBI, it may still be required to apply for income and franchise tax exemptions with a particular state, which is the case in California and North Carolina.

Other Reporting Considerations

Some governments require non-profits to register with their states and file annually IRS Form 990, Return of Organization Exempt from Income Tax. Many states publish these returns on their websites to provide residents with full disclosure to make informed decisions about the entities the elect to support with donations of time and money. Non-compliance can result in significant penalties as well as loss of tax-exempt status.

It is important that non-profit organizations understand the concept of economic nexus and how their fundraising activities across state borders can create tax liabilities, despite their federal tax-exempt status. The accounting, audit and advisory professionals with Berkowitz Pollack Brant work with not-for-profit entities, including charities, hospitals, religious organizations and private foundations, to understand and comply with a complex set of tax and regulatory challenges.

About the Author: Karen A. Lake, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant, where she helps individuals, businesses and non-profit entities navigate complex federal, state and local taxes, credits and incentives. She can be reached at the Miami CPA firm’s office at (305) 379-7000 or via email


Best Practices for Protecting Financial Information Online by Joseph L. Saka, CPA/PFS

Posted on January 13, 2016 by Joseph Saka

The Internal Revenue Service, in partnership with state taxing authorities, and tax preparation and processing firms, have stepped up their efforts to protect taxpayers against the rising incidences of tax-related identity theft and fraud. As a part of the new “Taxes, Security. Together.” initiative, the group is urging taxpayers to adopt the following best practices in order to better protect personal and financial information from online threats.

Understand and Use Security Software.  Security software helps to protect computers and the information stored on them against a broad range of online threats. Essential tools, including a firewall, privacy protection and anti-virus, anti-malware and anti-spam software, are often included as part of a computer’s operating system. Alternatively, users can download security packages that include all of these features from well-known providers. Never should a user download software from an unknown source or a pop-up ad, which is typically a scam.

For an added layer of protection, users may consider purchasing file-encryption software to keep sensitive information hidden from prying eyes and potential thieves.

Allow Security Software to Update Automatically.  Users should set their security software to update automatically so that their systems are constantly protected against new threats.

Look for an S in the Web Address to Stay Secure Online. When shopping, banking or conducting any transaction online, users should look for an “s” at the beginning of a website’s https address (“shttps”) to confirm that the site uses encryption to protect sensitive data. The shttps preface should appear on all webpages.

Use Strong Passwords. Passwords used to login to secure websites should have at least 10 characters that include a mix of uppercase and lower letters, numbers and special characters. Passwords for each account should be unique and avoid the use of one’s name, birthdate or other easily accessible personal information. Users should take precautions to keep their passwords safe and refrain from responding to any calls, emails or texts that ask users to update their accounts or share this information. These requests are usually scams perpetrated by criminals in an attempt to trick users into providing them with direct access to users’ accounts.

Secure Wireless Networks. Individuals should set up their home and office wi-fi by turning on encryption features and creating a strong password for authorized users to gain access to the network. Without these safeguards, thieves outside one’s home and office can easily tap into the network to steal information stored on computers or to commit crimes under the rightful owners’ accounts.

Proceed with Caution on Public Wireless Networks. Despite their convenience, public wi-fi networks and hotspots in hotels, restaurants and public places lack security features. Any information an individual sends through a mobile device or enters into a website can be easily accessed by thieves.

Avoid Phishing Attempts. Individuals should never click on links or reply to emails, texts or pop-up messages that ask for personal, tax or financial information, or one’s login credentials, including passwords. Legitimate businesses will never ask customers to send this personal information through unsecured networks. It is very common for thieves to pose as credible businesses, often going to extreme lengths, to try and trick individuals to share their personal information.

About the author: Joseph L. Saka, CPA/PFS, is co-CEO of Berkowitz Pollack Brant, where he provides income and estate planning, tax consulting and compliance services, business advice, and financial planning to entrepreneurs, high-net-worth families and family companies and business executives in the US and abroad. He may be reached in the CPA firm’s Miami office at (305) 379-7000 or via e-mail at



IRS Raises De Minimis Safe Harbor Tangible Property Expensing Threshold by Angie Adames, CPA

Posted on January 08, 2016 by Angie Adames

Responding to an influx of comments and requests from small businesses and accounting industry professionals, the IRS has raised the expensing limit that businesses without applicable financial statements (AFSs) may deduct for costs associated with the acquisition, production, improvement, repair and/or maintenance of assets used in a trade or business.


Effective for tax years beginning after January 1, 2016, the de minimis safe harbor amount for small businesses without AFSs under the Tangible Property Regulations will increase from $500 per item (or per invoice) to $2,500 per item (or per invoice).  The increase is expected to further reduce the administrative burden small businesses must tackle when applying the tangible property regulations and cover a broader range of commonly expensed items, such as computers, cellular phones and equipment, whose costs exceed the current $500 limit.


For taxable years after December 31, 2011, the IRS will not, upon examination, raise the issue of whether a taxpayer without an AFS can utilize the de minimis safe harbor for an amount not to exceed $2,500, if the taxpayer otherwise meets the requirements.


Businesses applying the Tangible Property Regulations, also known as the Repair Regulations, should consult with experienced tax professionals to ensure compliance and realize intended tax benefits.


About the Author: Angie Adames, CPA, is a senior manager  with the Tax Services practice of Berkowitz Pollack Brant, where she provides  tax and consulting services to real estate companies, manufacturers and closely  held business. She can be reached in the CPA firm’s Miami office at (305) 379-7000 or via email at


Updated: Businesses Face a Mountain of Reporting Requirements in 2016 under the ACA by Adam Cohen, CPA

Posted on January 07, 2016 by Adam Cohen

Time has run out for businesses with more than 100 full-time-equivalent employees (FTEs) to comply with the provisions of the Affordable Care Act (ACA), also referred to as Obamacare. During 2015, these employers were required to provide minimum essential health insurance coverage to 70 percent of their full-time workforces (and dependent children under the age of 26) or be prepared to make an Employer Shared Responsibility payment equal to $2,000 for every non-covered full-time employee after the first 80.  In addition, these employers will be responsible for a $3,000 shared responsibility payment (indexed for inflation) for each full-time employee that purchased health insurance through the Federal Marketplace and qualified for the premium tax credit in 2015 because the employee’s household income fell within certain thresholds and the employer-offered coverage was neither unaffordable nor provided minimum value.

For applicable large employers with 50 to 99 full-time equivalent employees, 2015 was a transitional year during which the offer to provide employees with minimal essential health care coverage was voluntary. That will change in 2016, as these applicable large employers will need to meet the minimal essential coverage mandates of the law.

As we enter the fourth quarter, businesses with at least 50 full-time equivalent employees should be prepared to comply with the ACA beginning on Jan. 1, 2016. Employers with 100 or more FTEs should be prepared to meet the law’s reporting requirements, by filing informational returns with the IRS and furnishing to employees statements about the health coverage offered, or not offered, in 2015.

Determine Status as an Applicable Large Employer

Under the final rules of the Patient Protection and Affordable Care Act, an applicable large employer refers to one “that employed an average of at least 50 full-time employees averaging at least 30 hours of service per week on business days during the preceding calendar year.” The employer must consider not only the hours it paid an employees for services but also the number of hours the employee did not actually work but was entitled to receive payments, such as during holidays and each employee’s vacation, incapacity or illness or time spent on jury duty or military duty.


For many businesses, making this assessment will be easy. For others, especially those with part-time workers (excluding seasonal workers) or related companies with a common owner, it will require some additional calculations to determine its full-time equivalent employees (FTEs) and whether it is considered an applicable large employer. For example, an employer will need to combine the number of hours of service of all of its non-full-time employees for the month and divide the total by 120. Additionally, employers should take special care to consider workers who may qualify as independent contractors, leased employees, bona fide volunteers or participants in government-sponsored work-study programs who may be excluded from these calculations and the shared responsibility rules.


Forms to Know

Applicable large employers with 100 or more full-time equivalent employees in 2015 have a responsibility to report to both the IRS and their individual employees information about the health care coverage they offer, if any, via IRS Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Both forms must be filed, regardless of whether or not the employer provided health coverage to its employees in 2015, by May 31, 2016, or by June 30, if filing electronically. Those applicable large employers that file more than 250 returns during the calendar year will be required to file electronically.

The reporting requirements will apply to employers with 50 or more FTEs beginning in January 2017.

Form 1094-C is used to provide to the IRS a summary an employer’s offer of health insurance for the year, or lack of employee health coverage for the tax year, as well as the total number of employees enrolled in an employer-provided health care plan.

Form 1095-C, which reports the minimum essential coverage an employer provided to each of its employees, must be submitted to both the IRS by May 31, 2016, or by June 30, if filing electronically, and to each full-time employee receiving such health coverage by March 31, 2016. Employers that are not considered applicable large employers under the ACA but who do sponsor self-insured group health plans for their employers, must file an information Form 1095-C as well as Form 1094-B, Transmittal of Health Coverage Information Returns and 1095-B, Health Coverage.

Both Forms 1094-C and 1095-C will be used by the IRS to determine if an employer owes a shared-responsibility payment as well as the amount of the payment. They also allow employees and the IRS to identify if employee are eligible to claim on their personal income tax returns a premium tax credit for each month they received health coverage through their employers.

Transition Relief

The IRS provides a reprieve from the shared-responsibility requirements for some applicable large employers in 2015, when they meet certain conditions, which include, but are not limited to, sponsorship of certain non-calendar year health plans, shorter measurement periods for identifying full time employees, and maintenance of benefits previously offered to employees since February 2014.

Information Reporting Penalties

Unless they qualify for transition relief, applicable large employers with 100 or more full-time equivalent employees in 2015, or 50 or more in 2016, have a responsibility to comply with the information reporting requirement of the ACA , even if they do not provide their employees with requisite health coverage. Failure to do so will result in a penalty of $250 for each unfiled return, with a maximum penalty of $3 million per employer. Additional penalties will be applied to an employer that “intentionally disregards” the reporting requirements.


Preparing for the applicable large employer reporting requirements of the Affordable Care Act can be an arduous and time-consuming process. It requires employers to consider a range of factors and be detailed and exact in its calculations and filings with employees and with the IRS, or risk penalties.

The advisors and accountants with Berkowitz Pollack Brant’s Tax Services practices work with individuals and businesses of all sizes to understand and comply with the provisions of Affordable Care Act.

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail

Estate Planning Tips for Blended Families by Kathleen Marteney, CRPC

Posted on January 05, 2016 by Richard Berkowitz, JD, CPA

When second marriages result in the blending of two families, a complicated financial picture may emerge. Couples coming into a second or third marriage bring with them ex-spouses, children from previous relationships and financial responsibilities, assets and liabilities that may carry deep emotional attachments.   Addressing these delicate issues from the onset will help newly blended families avoid a rocky road of financial disputes in the future. Following are some key points to consider:

Communicate. Disagreements over finances are a common source of marital discord. Spouses may enter a marriage with different financial assets, responsibilities and spending habits. Moreover, both parties should take an honest assessment of the new family dynamics their union will create, and identify potential challenges that may arise in the future should blended family members fail to get along or should the death of one spouse result in a change in a child’s inheritance. Tackling these issues early on may help to lay the foundation for a financially harmonious future.

Draw Up a Prenuptial Agreement. While far from being romantic, prenuptial agreements are an important instrument in the blended family tool box. Not only can they help to open dialogue about who is coming into the marriage with what, they also allow both parties to articulate their concerns, goals and responsibilities and establish a plan for division of property in the event of divorce. More specifically, they can protect one spouse in the event of the other’s passing and safeguard inheritances for one’s children.

Review and Update Estate Plans. While engaging in open dialogue, it’s a good idea to document the assets both parties bring into the marriage and the value of those assets, which may or not become the subject of property divisions should the couple later divorce. A new marriage may require updates to beneficiaries on wills, insurance plans and retirement accounts. Both spouses may also consider changing who gets what in an inheritance and when, should one spouse pass away.

Create a Trust. Putting assets in trust can accomplish several goals, not the least of which includes shielding assets from creditors and from public record upon the death of one spouse. For the blended family, a trust provides the grantor the ability to direct how assets should be distributed and shared among a surviving spouse, biological children and step-children. They may also contain specific language spelling out how beneficiaries may or may not spend inherited assets.

With a qualified terminable interest property (QTIP) trust, the grantor may provide lifetime income to a surviving spouse while preserving underlying trust assets for the benefit of his or her children.

Another option is to fund an irrevocable life insurance trust (ILIT), which purchases a life insurance policy and becomes both the policy holder and beneficiary, which, in turn, allows death benefits to pass into the trust free of both federal estate and income taxes.

Estate planning for blending families is a complex endeavor that should be undertaken with the guidance of experienced financial advisors who can help develop a plan that addresses the unique tax, financial and emotional implications of one’s decisions.

About the Author: Kathleen Marteney, CRPC, is a registered representative with Raymond James Financial Services and a financial planner with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants. She can be reached at 800-737-8804 or via email at

Provenance Wealth Advisors, 200 S. Biscayne Blvd., Miami FL 33131 (954)712-8888

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kathleen Marteney and not necessarily those of Raymond James. You should discuss any tax and legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.



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