That sounds like a question with no answer. Everyone consented. No one sued. The lawyers papered it properly. But the U.S. Tax Court just put a number on exactly that scenario, and the number is $35,141,321 — twice over. The opinion is McDougall v. Commissioner, T.C. Memo. 2026-58, filed July 20, 2026, and if your estate plan runs through a marital trust, it deserves an hour of your attention.
Clotilde McDougall died in December 2011. Her will left the residue of her estate — primarily her share of a family real estate business she had inherited from her own father — to a trust. Her husband Bruce received the trust’s net income at least annually, plus discretionary principal for his “health, maintenance and support in his accustomed manner of living.” He also held a limited testamentary power to appoint the principal among Clotilde’s descendants. Her two children, Linda and Peter, held the remainder.
A QTIP election was made, so no estate tax came due at Clotilde’s death. The property would be taxed later, in Bruce’s estate. Standard, careful, unremarkable planning.
Then, in October 2016, the family decided to simplify. Bruce and both children signed a nonjudicial agreement terminating the trust and distributing every asset — stipulated at $117,604,143 — outright to Bruce. The children took nothing.
The marital deduction for property left in trust is a bargain, not a gift. Under Sec. 2056(b)(7), a surviving spouse’s trust interest normally fails the deduction because it is a terminable interest — it ends at death and passes to someone else. Congress carved out the QTIP exception, but the price of the exception is that the property gets taxed somewhere. Defer at the first death, pay at the second.
That bargain assumes the trust actually runs its course. When the family collapses it early, the tax code does not simply shrug. Two provisions wake up. Sec. 2519 treats a surviving spouse’s disposition of a qualifying income interest as a transfer of everything but that income interest. And Sec. 2207A(b) gives the spouse who eats that gift tax a statutory right to recover it from the people who received the property.
In an earlier round of this same litigation, McDougall v. Commissioner, 163 T.C. 112 (2024), the court sorted out who gave what to whom. Bruce made no gift: under the QTIP rules he was already treated as owning the property, so ending up with it outright transferred nothing away from him. Linda and Peter were the donors. They surrendered valuable remainder interests and received nothing in return. That is the textbook definition of a gift.
What the 2024 opinion left open was the hard question. What were those remainder interests worth?
The IRS said $53,408,746 per child. The children said $156,000 — essentially nothing — on the theory that Bruce’s power of appointment could have written them out entirely, so a hypothetical buyer would have paid almost nothing for their interests.
Judge Halpern rejected both, and the reasoning is the part worth carrying into practice.
First, the power of appointment did not reduce the value. Clotilde’s will required that on termination, distributees receive “assets of a value equal to the value of their respective interest in the trust.” Had the family terminated the trust without specifying who got what, a Washington court would have honored her intent — and her intent, evidenced by the fact that she used a trust at all rather than leaving everything to Bruce outright, was that her children end up with something substantial.
Second, and more importantly for anyone who administers trusts: the Sec. 7520 actuarial tables do not control. The IRS argued the tables must govern remainder valuations. The court disagreed on a deeper ground than the children had even argued. Sec. 7520 says values “shall be determined” under the tables — but the Commissioner had quietly dropped the statute’s opening words, “For purposes of this title.” A trustee dividing trust assets on termination is not making a determination for purposes of the Internal Revenue Code. He is deciding what each beneficiary owns under state law.
The court anchored this in a rule older than the QTIP itself, quoting Morgan v. Commissioner, 309 U.S. 78, 80 (1940): “State law creates legal interests and rights. The federal Revenue Acts designate what interests or rights, so created, shall be taxed.” A trustee might consult the Sec. 7520 tables for guidance. He is not bound by them.
Third, the children won a real point. Because they let Bruce take everything, they escaped the Sec. 2207A(b) obligation to reimburse him for the gift tax he would otherwise have owed. What they gave up, the court held, was their distribution net of that avoided liability — dividing the pre-reimbursement value by 1.4 to reflect the 40 percent gift tax rate. That single holding cut roughly $14 million off each gift.
The Commissioner had conceded that if the tables did not apply and Sec. 2207A did, each gift was worth no more than $35,141,321. The court held him to it.
There is a fair case that nothing went wrong here. The family got what it wanted. Bruce received the assets, the children presumably understood they were deferring to their father, and the property remains in Bruce’s estate where it will be taxed at his death — which is exactly where the QTIP bargain always said it would land. Nobody evaded anything. The children may well have made this gift with open eyes and would make it again.
That is true, and it matters. A nonjudicial settlement agreement is a legitimate, valuable tool, and the answer to this case is emphatically not “never terminate a trust early.” Families have good reasons: a trust that has outlived its purpose, administration costs that dwarf the corpus, a beneficiary structure that no longer matches anyone’s life.
But the children in this case also spent four years litigating whether their gift was worth $156,000 or $53 million. Whatever they understood in 2016, they did not understand that.
Here is the sentence I would want every trustee to be able to say before a family signs anything: I can tell you what this will cost.
The failure in McDougall was not the termination. It was that nobody appears to have priced it. A remainder interest is property. Handing it to someone else is a transfer. And the moment a QTIP is involved, the transfer runs through Sec. 2519 and Sec. 2207A in ways that produce eight-figure consequences from a document that reads like family housekeeping.
Notice, too, where the valuation actually came from: Washington state law and the four corners of Clotilde’s will — not a federal table. That should change how a trust officer prepares for these conversations. North Carolina, Delaware, South Dakota and Tennessee each enact the Uniform Trust Code differently, and each state’s nonjudicial settlement provisions and rules of testamentary construction will drive what a beneficiary is actually entitled to on early termination. The governing instrument and the governing state are the analysis. The Sec. 7520 tables are a convenience, and after McDougall, an unreliable one.
None of this requires a trustee to be the family’s tax counsel. It requires something smaller and harder: refusing to let a document get signed on the assumption that unanimous consent is the same thing as no consequences. Everyone at that table in October 2016 agreed. Agreement was never the issue. The issue was that a $117 million trust does not stop being a taxable structure just because the people inside it are getting along.
A beneficiary can waive a right. What a beneficiary cannot do is waive the arithmetic.
Source: Tax Court Determines Value of Children’s Deemed Gift to Father (Trusts & Estates / WealthManagement.com), discussing McDougall v. Commissioner, T.C. Memo. 2026-58 (July 20, 2026). Educational only — not legal, tax, or investment advice.
]]>It is the age the plan assumes you die. In a guest post published at Kitces.com this morning, Dr. K. Jeremy Ko of ShoreUp Retirement Solutions reports that nearly 90% of advisors simply accept the age-90 or age-95 assumption already built into their planning software. Not a judgment about a particular human being. A default.
That is a defensible shortcut for a household running its own numbers. It is something closer to a breach of process for a trustee, and the reason has nothing to do with actuarial science.
Ko’s point is that the variation is not noise. Across demographic lines — income, education, race — expected lifespans differ materially, in many cases by 10 to 15 years or more. Once individual health factors are layered on top, two otherwise similar clients can diverge by as much as 20 years.
Asking the client does not solve it. The research Ko cites finds a systematic “flatness bias”: younger people underestimate how long they will live, and older people overestimate how much time they have left. Both errors point the wrong way. The young underestimate and undersave. The old overestimate and delay irreversible decisions, like when to claim Social Security, on the strength of a horizon they do not have.
What has changed is that the alternative is now cheap. Ko points to the Society of Actuaries calculator, the University of Connecticut’s Goldenson Center for Actuarial Research, and the public version of Northwestern Mutual’s Lifespan Calculator — tools that take income, education, and health inputs and return something specific to the person in front of you. A family uncomfortable discussing illness or family history can complete the questionnaire privately and hand back only the output.
For someone planning their own retirement, an overly conservative horizon is a personal tradeoff. You spend less than you could have and your heirs receive more than you intended. Uncomfortable, but it is your money and your call.
A trustee has no such latitude, because the assumption does not land on one person. It allocates between two.
N.C.G.S. 36C-9-902(a), North Carolina’s enactment of the prudent investor rule, requires a trustee to invest and manage trust assets as a prudent investor would, “by considering the purposes, terms, distribution requirements, and other circumstances of the trust.” Distribution requirements are, at bottom, a function of how long the income beneficiary is expected to need them. And N.C.G.S. 36C-8-803 is blunter still: “If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests.”
Now drop a software default into the middle of that duty.
Assume a life income beneficiary reaches 95 when her health profile points to 78, and the portfolio gets tilted toward long-horizon growth and preservation of capital she will never live to see. The remaindermen collect the difference. Reverse it — assume 90 for a healthy 65-year-old likely to see 100 — and the trustee sustains a distribution rate the corpus cannot carry, and the remaindermen absorb the shortfall at the other end.
Same unexamined number. Opposite injury. In both cases the trustee has picked a winner between the income beneficiary and the remainder beneficiary without ever framing it as a choice, which is precisely what impartiality forbids.
Conservatism here is not laziness, and the case for the default deserves to be stated properly.
No trustee has ever been surcharged for assuming a beneficiary lived too long. Underestimating lifespan is the error with the visible victim — a beneficiary who outlives the plan, in the room, out of money — while overestimating it produces a diffuse loss to remaindermen who may never know what they were owed. A trustee choosing the safe assumption is choosing the failure mode that is easier to defend, and that is a rational thing to do. Individualized modeling also requires asking a family about smoking, chronic illness, and mortality; it is intrusive, it is a probabilistic estimate applied to a sample size of one, and a specific number is easier to attack in hindsight than a standard one.
Ko concedes part of this himself. He expects advisors to keep a conservative tilt regardless, running something closer to a 90th percentile lifespan than the 50th percentile median. Nobody in this debate is arguing for planning to the median and hoping.
But there is a difference between a conservative assumption and an unexamined one, and that difference is most of the job.
A trustee who considers a client-specific estimate, sees 78, and still plans to 92 because the trust cannot absorb longevity risk has discharged the duty. The alternatives were weighed, the tilt was deliberate, the beneficiaries’ respective interests got due regard, and the file says so. A trustee who plans to 95 because the software opened to 95 has not discharged anything. He has outsourced an allocation between beneficiaries to a vendor’s default setting.
The fix is not expensive. Run the estimate, record what it said, record why the plan departs from it, and record what the departure costs the beneficiary on the other side of it. That single paragraph in the file converts a default into a decision, and a decision is the only thing a fiduciary standard can actually evaluate.
A trustee is entitled to be conservative. A trustee is not entitled to be conservative by accident, at one beneficiary’s expense, because a number appeared in a field and nobody changed it.
Source: Using Personalized Lifespan Estimation For Retirement (Nerd’s Eye View, Kitces.com), guest post by Dr. K. Jeremy Ko. Educational only — not legal, tax, or investment advice.
]]>That is the question underneath a recent California appellate decision, Moramarco v. Nowakoski (No. E084620), and the answer the court gave is one every beneficiary and every fiduciary should sit with. The facts are ugly, the law is clean, and the lesson is older than any statute: the person who holds what belongs to someone else does not get to set the price of betraying them.
John Moramarco died in 2016. His living trust — drafted by Edward Nowakoski, the very attorney he later named as successor trustee — held roughly $684,000 after two of its real properties were sold. Over the next two years, that money left the trust account. Not through bad investments or an honest miscalculation, but through transfer after transfer into Nowakoski’s own hands. By the time a beneficiary petitioned to suspend him in 2019, the trust account held $41.06.
The consequences arrived from every direction. The State Bar found that Nowakoski had willfully misappropriated the funds, disbarred him, and ordered $542,688 in restitution. The district attorney charged him with grand theft, money laundering, fraud, embezzlement, and perjury; he pleaded guilty and was placed on probation. And then, in a separate trial, the probate court imposed one more thing: a civil penalty of $399,681 under Probate Code section 859, plus attorney fees.
That last penalty is where the law got interesting.
Probate Code section 859 is the teeth of California trust law. When a court finds that someone has in bad faith wrongfully taken property belonging to a trust, an estate, an elder, or a minor, the wrongdoer “shall be liable for twice the value of the property recovered.” Double damages. The penalty attaches once two conditions are met: the property is recoverable under section 850, and the taking was in bad faith.
Nowakoski did not really dispute that he took the money. His argument was about the price. He was 71, he told the court, living on roughly $2,871 a month in Social Security, his assets largely consumed by the restitution he had already paid. Imposing a six-figure penalty on a man who could not pay it, he argued, was an excessive fine barred by the federal and state constitutions.
There is a real principle on Nowakoski’s side, and it deserves to be stated plainly. Courts do sometimes weigh a defendant’s ability to pay before imposing a penalty, and a punishment so far beyond a person’s means that it can never be satisfied starts to look less like justice and more like theater. A penalty no one can collect deters no one who is already ruined. That is not a frivolous point.
It just was not the law here. The Court of Appeal held that section 859 imposes a strict and mandatory penalty. The statute is silent on mitigating factors, and that silence is not an invitation — it is an instruction. A section 859 award is punitive in nature, the court acknowledged, but it is not a punitive damages award, and only the latter requires evidence of the defendant’s financial condition. The probate court therefore had no authority to shrink the penalty because Nowakoski was broke.
The court also explained why this was not an unconstitutional excessive fine. It distinguished Hale v. Morgan, where the California Supreme Court struck down a penalty of $100 per day against a landlord precisely because it was “mandatory, mechanical, potentially limitless in its effect regardless of circumstance.” Section 859 is different in kind: it is a fixed multiple of actual damages — twice what was taken, never more — and it applies only on a finding of bad faith. A penalty tethered to the size of the theft and gated by the wrongdoer’s intent is not limitless. It is proportionate by design.
The purpose, the court emphasized, is deterrence. And deterrence does not bend to the deterred party’s bank balance.
It would be easy to file this under “extreme case” and move on. A disbarred attorney who looted a trust he drafted is not the typical trustee, and the court was careful to say so: section 859’s double penalty is not aimed at the family member who makes a self-dealing error or mishandles an account out of inexperience. It turns on bad faith, and courts keep real discretion to decide whether that line was crossed. Beneficiaries should not assume a doubling award is automatic just because a trustee fell short.
But the principle underneath the case is not extreme at all. It is the whole foundation of holding property for someone else. A fiduciary answers for what he was trusted with, and the answer cannot be negotiated down to whatever is convenient after the fact. I learned that discipline in a different uniform, signing for equipment where the count had to balance whether or not it was convenient, and where “I already spent it” was never an answer to “you signed for it.” Trust administration runs on the same rule. The duty is fixed at the moment you accept it, not at the moment you are caught.
Section 859 simply writes that truth into statute. Break faith with a beneficiary in bad faith, and the law does not ask what you can afford. It asks what you took, and then it asks for twice.
Source: Bad Faith Comes at Full Price: Moramarco v. Nowakoski and the Teeth of Probate Code Section 859 (Downey Brand LLP, via JD Supra), discussing Moramarco v. Nowakoski, No. E084620 (Cal. Ct. App. 4th Dist. 2026). Educational only — not legal, tax, or investment advice.
]]>Conagra Brands just answered that question for anyone still holding the stock for income. Alongside its latest quarterly results, the company booked a $2 billion goodwill impairment and cut its dividend in half. One analyst who had rated the stock a buy for its “defensive profile” is now stepping aside, calling his own prior thesis a value trap.
The goodwill impairment tells you the company itself decided a chunk of what it once paid for its brands is no longer worth what the balance sheet said it was. The dividend cut tells you management would rather keep the cash than keep the promise. Both moves happened at once, which is rarely a coincidence. A board does not halve a payout it believes is sustainable; it cuts because the alternative is worse.
Picture a trust funding an income beneficiary’s care from Conagra’s quarterly check. The valuation looked cheap by every conventional measure, and the yield looked like a floor under the price. Overnight, the floor moved. That is the risk a yield-focused allocation always carries and rarely prices in: the payout is a decision the board makes every quarter, not a contractual right the shareholder is owed. A beneficiary counting on that income has no recourse when the number changes, only a smaller check and a trustee who has to explain why.
A dividend cut is not automatically bad stewardship on the company’s part. Preserving cash to shore up a stressed balance sheet, rather than borrowing to fund a payout the business can no longer support, is often the more responsible call for the company’s own long-term health. Income investors who stay for the turnaround sometimes end up better off than the ones who bail at the bottom. The cut itself is not the sin.
The sin is building an allocation around a number the company can change without asking permission. The prudent investor rule does not ask a trustee to chase yield; it asks for a portfolio managed for total return, diversified enough that no single dividend cut reorders a beneficiary’s income. Conagra’s stock looked cheap because the market already knew something the yield chasers hadn’t priced in. Prudence buys the business behind the payout, not the payout itself.
Source: Conagra: I Walked Right Into A Value Trap; Now I Am Stepping Aside (Rating Downgrade) (Seeking Alpha). Educational only — not legal, tax, or investment advice.
]]>That is not a hypothetical. It is the fact pattern behind a recent IRS private letter ruling, LTR 202629011, and it is worth reading closely — because the mistake was ordinary, the stakes were enormous, and the fix was never guaranteed.
A husband died. His estate plan routed property into a marital trust for his surviving spouse — the standard way to defer estate tax until the second death rather than pay it at the first. The wife, serving as executor, did what any careful person does: she retained an accounting firm and an attorney to prepare the federal estate tax return, the Form 706.
Somewhere in that preparation, the marital trust property was reported as something other than qualified terminable interest property. No election was made. And a marital deduction that should have been automatic was, on the face of the return, simply gone.
The marital deduction for a trust interest is not free. Under Sec. 2056(b)(7), property left to a spouse in trust normally fails the deduction because the spouse’s interest is a “terminable interest” — it ends at her death and passes to someone else. Congress carved out an exception for qualified terminable interest property, a QTIP, but the exception only applies if the executor affirmatively elects it on the return. Miss the election and the exception evaporates. The property is pulled back into the first spouse’s taxable estate, and estate tax that should have waited until the second death is accelerated to the first.
For a large estate, that is not a rounding error. It is a seven-figure swing produced by a box that was never checked.
The IRS granted the estate an extension under Reg. Secs. 301.9100-1 and 301.9100-3 — the discretionary “9100 relief” that lets a taxpayer make certain late elections when the failure was not a strategic hindsight play but an honest miss. The Service found what these rulings almost always turn on: the executor acted in good faith and reasonably relied on qualified tax advisors, and granting relief would not prejudice the government. The late QTIP election was allowed. The marital deduction was preserved. The widow was made whole.
That is the happy ending. It is also the trap.
The reassuring read is that the system worked. A good-faith mistake was correctable, the professionals owned it, the IRS was reasonable, and no family was ruined by a clerical slip. All true. But 9100 relief is discretionary, not a right — it costs the price of a private letter ruling, it takes months, and it depends on facts staying clean. Reliance on an advisor cures an innocent error; it does not cure a taxpayer who knew better, and it does not survive a record that looks like a second look after the numbers came in. Betting a marital deduction on the IRS’s mercy is not a plan. It is a rescue.
The cleaner practice was available the whole time: a protective QTIP election on a timely return. When there is any doubt about whether a trust needs the election, an executor can simply make it — the cost of an unnecessary election is close to nothing, and the cost of a missing one is the whole deduction. An executor is a fiduciary, and a fiduciary’s job is not to be rescued gracefully after a failure. It is to close the gap before it opens.
I learned that discipline in a different uniform, signing for equipment where the time to catch a shortage was during the count, not after. Estate administration runs on the same principle. The election you make defensively on a quiet afternoon is worth more than the ruling you chase after the return is filed and the surviving spouse is waiting to hear whether the plan her husband built still holds.
Source: IRS Grants Estate Late QTIP Election, Preserving Marital Deduction (Wealth Strategies Journal), reporting LTR 202629011. Educational only — not legal or tax advice.
]]>On July 4, 2026, Sec. 530 “Trump Accounts” officially launched — a new kind of starter retirement account opened and funded on behalf of a minor child. As Ben Henry-Moreland lays out at Kitces.com, parents, other individuals, employers, and even government and charitable organizations can contribute on a child’s behalf up until the year before that child turns eighteen. After that, the account effectively converts into a traditional IRA, and a withdrawal before age 59½ carries the same 10% penalty that discourages anyone from raiding retirement savings early. The design is intentional: make the money hard to touch, so it compounds for decades.
Opening one looks nothing like walking into a custodian and setting up an IRA. A Trump Account can currently be opened in only one place — a website and app administered by the broker-dealer Robinhood — after filing IRS Form 4547 (through the government’s Trump Account app, the IRS website, or alongside a tax return) and then activating the account at trumpaccount.com. For now the only investment option is an S&P 500 index fund, with broader U.S. equity funds promised later, and rollovers to a different custodian are not expected until sometime in 2027. None of that is how most parents picture “opening an account for the kids.”
Here is the part worth slowing down for. When the beneficiary turns eighteen, the account automatically rolls into a traditional IRA — and something heavier than money changes hands. The now-adult owner inherits the duty to choose the investments, to track a cost basis that likely mixes pre-tax and after-tax dollars, and to name a beneficiary of their own. Translate that for a family: your eighteen-year-old receives not just a funded account, but a set of fiduciary chores no one has taught them to perform, at roughly the age when most young adults are least equipped to perform them.
The fair rebuttal is that a funded account is pure upside. Even an IRA left on autopilot — invested in a broad index and never touched — will almost certainly beat the account that was never opened at all. That is true. But “better than nothing” is a low bar for a fiduciary, and an asset handed to someone who does not understand it is precisely how good intentions decay into dormant accounts, lost basis records, and beneficiary forms that no longer match the family. For some households a 529 plan or a UTMA account will still fit the goal better; the right tool depends on what the money is actually for.
A Trump Account is not really a product decision. It is a stewardship decision with a delivery date, and the delivery date is a teenager’s eighteenth birthday. The parents who get the most from it will be the ones who treat the years before that handoff as a teaching window — sitting at the kitchen table the way you would walk a successor through a hand receipt, so the person signing for the asset actually understands what they are signing for. The account will compound on its own. Whether the heir can carry it is the part that has to be built by hand.
Source: An Advisor’s Guide To Opening 530A “Trump Accounts” (Nerd’s Eye View, Kitces.com). Educational only — not legal or tax advice.
]]>Cerulli Associates’ latest research says platform sponsors don’t think so. Tax optimization ranked as their top development priority for the second consecutive year, with more than three-quarters of respondents naming it a key focus — well ahead of adding new alternative investment offerings. Cerulli’s Scott Smith put it plainly: tax capabilities are “a much more reliable source of post-tax alpha” than another fund lineup.
For a registered investment adviser chasing differentiation, this is a competitive shift. For a trustee, it is closer to a return to first principles.
The Uniform Prudent Investor Act does not treat taxes as an afterthought. Section 7 tells a trustee to incur “only costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee” — and tax drag is a cost like any other, one a prudent trustee is expected to manage, not merely disclose. Asset location, tax-loss harvesting, coordinated tax-aware withdrawals: these aren’t marketing features. They are what “reasonable care, skill, and caution” looks like when the portfolio sits inside a trust instrument instead of a brokerage account.
Investment performance has gotten harder to differentiate. Low-cost indexing and broad product access narrowed that gap years ago. After-tax outcomes stayed personal, because they depend on the beneficiary’s bracket, the trust’s situs, and the timing of distributions — the exact variables a fiduciary is already supposed to be tracking.
Building real household-level tax optimization is hard, and Cerulli says so directly: most advisory platforms still struggle to coordinate planning, portfolio management, and client data well enough to deliver it consistently. A firm that oversells “tax alpha” it can’t actually operationalize has created a new disclosure problem, not solved an old one.
A beneficiary rarely asks a trustee for basis points. They ask why the distribution check was smaller than expected, or why last year’s rebalancing triggered a tax bill nobody warned them about. Tax-aware administration is how a trustee answers that question before it gets asked — coordinating asset location across accounts, harvesting losses on a schedule instead of by accident, and sequencing distributions against the beneficiary’s actual bracket rather than the calendar.
Cerulli is describing a technology and staffing investment cycle at the platform level. Underneath it is a duty that predates the software: manage the assets as if the tax bill were part of the portfolio, because for the family who receives what’s left, it always was.
Source: Tax Optimization Is Quietly Becoming Wealth Management’s Next Competitive Battleground (The Wealth Advisor). Educational only — not legal or tax advice.
]]>Nobody calls that a fiduciary duty in the Army. They call it property accountability, and they teach it with hand receipts, sub-hand receipts, sensitive-item inventories at two in the morning, and the quiet understanding that if it goes missing, the investigation starts with you. But it is a fiduciary duty in everything but name: you are holding what belongs to someone else, you answer for it with documentation, and your signature means something.
I spent six years living inside that discipline — eventually as a company executive officer accountable for 197 property lines worth more than $15 million. I learned what it takes to recover a quarter-million dollars of “lost” equipment (mostly: caring more than the last five people who signed the paperwork). I learned that a safety procedure only works if it’s written so a tired nineteen-year-old can follow it at 3 a.m. And I learned the most important lesson of stewardship: the person who owns the thing is trusting the system you build, not the promises you make.
When I left the Army and built a real estate practice from zero — $2.2 million closed in the first year — I found the same principle wearing different clothes. Families handed me the largest transactions of their lives. The job wasn’t salesmanship; it was translation and stewardship: turning appraisals, financing structures, and disclosure requirements into decisions a family could make with confidence.
Trust administration is the mature form of that same promise. A trustee holds legal title to property that belongs, in every meaningful sense, to someone else — a surviving spouse, a child with special needs, a grandchild not yet born. The trustee’s tools are the ones I’ve been using my whole adult life: meticulous records, internal controls, honest accounting, and the willingness to be personally answerable.
That’s why I’m completing the Master of Trust and Wealth Management at Campbell University — the nation’s only graduate program of its kind — with coursework across fiduciary law, estate and gift taxation, investment analysis, and wealth-transfer planning. It’s also why I built the two interactive guides on this site: The Seasons of Your Wealth, on planning across a lifetime, and Settling an Estate, on what actually happens in the year after a death. Plain English on the surface, statute citations underneath — because families deserve clarity, and professionals owe them precision.
The word gets used loosely. Here is the version I hold myself to, learned in uniform and sharpened in graduate study:
Wealth management talks a great deal about returns. The families I want to serve are usually asking a quieter question: will what we built be safe with you? My whole career has been practice at answering that question honestly.
If you’re asking it now — about your own plan, your family’s estate, or a trustee’s duties — I’d welcome the conversation.
]]>The IRS just made its position unmistakable, and the fallout is now landing on advisors — not just promoters.
Following final regulations that named certain charitable remainder annuity trust (CRAT) structures as listed transactions, the practical burden has shifted onto the advisory community. Material advisors and participants now carry an affirmative duty to disclose, and the penalties for skipping that disclosure are severe — reporting failures in this regime run into six figures per lapse. The message to anyone whose name touches one of these trusts: the reporting is not optional, and “I didn’t know I had to file” is not a defense.
(For the mechanics of the abusive structure itself — the appreciated-property transfer, the single-premium annuity, and the §72/§664 sleight of hand — see my earlier note, When Silence Becomes the Violation.)
You can call a disclosure requirement more paperwork. Plenty of advisors will. But the requirement is doing something worth understanding: it separates the CRATs that are genuinely charitable from the ones that only wear the costume.
A CRAT that puts the charity first — where the remainder interest is real, the income stream is honest, and the donor actually intends the gift — has nothing to hide on a disclosure form. It reports its structure and moves on. The trusts that suddenly look nervous when a reporting box appears are answering the question about their own purpose more honestly than any brochure could.
Charitable remainder trusts remain one of the most useful instruments in wealth transfer, and I cover the legitimate versions in the Wealth Guide: selling an appreciated, concentrated position inside the trust with minimal tax drag, receiving income for life, and leaving a genuine gift to a cause you believe in. The IRS is not attacking that plan. It is drawing a line between planning and disguise, and asking the people who advise on these structures to stand publicly on the right side of it.
For a fiduciary, that line was never a burden. It was always the job. The disclosure just puts it in writing.
Source: IRS Targets Abusive CRAT Schemes With New Final Regs (WealthManagement.com). Educational only — not legal or tax advice.
]]>Nobody did. That is precisely the problem.
The IPO priced off private markets with no real public price discovery. The company posts billions in losses. And because of immediate index inclusion, the stock lands in major indices — and therefore in the target-date fund inside your retirement plan — by default, with no one along the chain having actually chosen it. Layer on dual-class shares, and the retirement savers now holding the stock get economic exposure with no vote to go with it. Ownership without influence, added to your account by inertia.
The CFA Institute is asking investment professionals to weigh in — a short survey on dual-class shares, founder control, and index eligibility, surfaced through CFA Society North Carolina. It is a question worth two minutes of any fiduciary’s time.
I’ll steelman the other side, because it’s a real position: an index is supposed to reflect the market as it is, not as a committee wishes it were. Curate the index and you’ve swapped a transparent rule for someone’s judgment — and judgment can be wrong, or captured. Broad, rules-based, unopinionated exposure is a feature, not a bug.
Fair — but a fiduciary owes beneficiaries more than exposure. A trustee’s duty isn’t merely to give a beneficiary a slice of whatever the market is doing; it’s to act with care and loyalty on their behalf, which includes recourse when the thing they own gives them none. “The index said so” is an explanation, not a discharge of duty. When a structure delivers economic risk stripped of any governance right, “it’s in the index” starts to sound less like prudence and more like abdication.
This connects directly to a theme in the Wealth Guide: a concentrated or non-negotiable position quietly entering a portfolio is a risk to manage deliberately, not to inherit by default. The difference between a plan and a drift is whether someone chose.
Nobody chose to put SpaceX in your retirement account. For a fiduciary, that sentence is the whole issue.
Source: CFA Institute survey on dual-class shares and index eligibility, via CFA Society North Carolina. Opinion; my own views — not investment advice.
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