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Estate Planning Strategies for Non-U.S. Citizens

Navigating Your Trust & Estate Planning Options as a U.S. Resident

Non-U.S. citizens residing in the United States endure some unique estate planning challenges when it comes to taxes. If you’re a U.S. resident (but not a citizen), the IRS will treat you similarly to a U.S. citizen – with a few exceptions. However, if you’re a nonresident alien, the tax treatment of your estate will change greatly.

Understanding Residency: What Does It Mean to Be a U.S Resident?

IRS regulations define a U.S. resident for federal estate tax purposes as someone who had his or her domicile in the United States at the time of death. One acquires a domicile in a place by living there, even briefly, with a present intention of making that place a permanent home.
Whether you have your domicile in the United States depends on an analysis of several factors, including the relative time you spend in the United States and abroad, the locations and relative values of your residences and business interests, visa status, community ties, and the location of family members.

Federal Gift/Estate Taxes & Exemptions for U.S. Residents

If you qualify as a resident, you’re subject to federal gift and estate taxes on your worldwide assets. However, you also enjoy the benefits of the $11.18 million lifetime gift and estate tax exemption, along with the annual $15,000 gift tax exclusion. And you can double the annual exclusion to $30,000 through gift-splitting with your spouse, so long as your spouse is a U.S. citizen or resident. The unlimited marital deduction isn’t available for gifts or bequests to non-citizens, though it is available for transfers from a noncitizen spouse to a citizen spouse.

Estate Tax Law for Nonresident Aliens

Being a nonresident alien (if you’re neither a U.S. citizen nor a U.S. resident) is bittersweet in regard to estate tax law. The good news is that you’re subject to U.S. gift and estate taxes only on property that’s “situated” in the United States. The bad news? Your estate tax exemption drops from $11.18 million to a miniscule $60,000, meaning substantial U.S. property holdings can result in a sizeable estate tax bill.

Taxable Property Includes:

  • U.S. real estate
  • Automobiles
  • Mobile homes
  • Aircrafts
  • Farm equipment/machinery
  • Office furnishings
  • Artwork
  • Other tangible personal property located in the U.S.

The Rules on Taxable Intangible Property

Determining the location of intangible property — such as stocks, bonds, trademarks and copyrights — is more complicated. For example, if a nonresident alien makes a gift of stock in a U.S. corporation, the gift is exempt from U.S. gift tax. But a bequest of that same stock at death is subject to estate tax. On the other hand, a gift of cash on deposit in a U.S. bank is subject to gift tax, while a bequest of the same cash would be exempt from estate tax.

Your status as either a U.S. resident or a nonresident alien will affect the estate planning strategies available to you. Holbrook & Manter can help you create an estate plan that will minimize estate tax and allow you to pass more on to your loved ones.

Data Landscape Shifting Abroad

By: Jordan Matulevich- Staff Accountant

The coming changes in the European Union’s new General Data Protection Regulation (GDPR) will have far reaching implications for businesses in the United States when it activates May 25, 2018.

While many may think GDPR may only affect the likes of Fortune 500 companies, the reality is any company currently possessing EU consumer data, or planning to someday, will be forced to comply with the new standards, or face harsh penalties. The user data covered by GDPR includes private user IP addresses, social security numbers, and other sensitive details. Noncompliance with the new ruling will result in a penalty of €20M ($25M) or 4% of global annual sales, whichever is larger.

The new GDPR regulations will force many American businesses to do a ground up analysis of how they are collecting and maintaining international user’s data. Experts predict the new regulation to result in restructuring costs around data processing and the creation of a new corporate officer position: data-protection officer.

The big questions that GDPR effected companies will be asking themselves is: how much consumer data do we have, how secure is it, and why do we have it? The regulation will now give international users the right to forbid companies from collecting and selling their personal data to outside organizations, as well as forcing companies to remove all personal data for a single user when requested– all expenses to be incurred by the company.

GDPR’s effects have the potential to reshape the landscape of global commerce, as well. Many companies will be unable to comply with the stringent structures needed to maintain data authenticity and will resort to either farming out data management to third party companies or incorporating existing data protection products into their repertoire. Companies like Microsoft have already jumped at the opportunities presented by GDPR. Many of the tech giant’s products already include data security tools such as within their cloud computing service, Azure, which includes many data protection features available to users.

While GDPR’s purpose may be to preserve the privacy of individuals; the business effects have the potential to put major strain on businesses unable to comply with the rigid standards. This is something our SOC team is following closely. We invite you to also visit our SOC Audit Services website to learn more: www.SOCAuditServices.com

Thank you to The Ohio Society of CPAs!

This time of year is challenging for any accounting professional. So many of our partners and supporters realize this and shower us with goodies to get us through tax season. Banks, law firms, associations… so many come out in droves to give us the pushes we need to make it to the finish line.

Just yesterday, The Ohio Society of CPAs sent out a team on foot to deliver goodies and other appreciation items. They visited three of our office locations (Wow!) and personally presented our team members with everything from treats and granola bars…to drink coozies and pens. What a nice surprise with a personal touch to go along with it. Our many thanks to The Ohio Society of CPAs for visiting us in Columbus, Marion and Marysville. Our team is comprised of many proud members of OSCPA.

The Ohio Society of CPAs partners with the accounting profession to advance the state of business so Ohio can enjoy a healthy and sustainable economic environment. We are a hub of knowledge, education and advocacy for our members and their teams, providing a vibrant, solutions-oriented community that helps CPAs andbusinesses thrive. To learn more about OSCPA visit their website at: www.ohiocpa.com


Looking for a New SOX Firm?

By: Dave Gruber, CPA-  Director, Risk Advisory Services

The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation passed by the U.S. Congress to protect shareholders and the general public from accounting errors and fraudulent practice on the enterprise, as well as improve the accuracy of corporate disclosures.  If you know you need to be SOX compliant and you are looking for a new SOX provider, or looking to change SOX firms…what should you look for in your new SOX firm?  To paraphrase the Real Estate mantra “Location, Location, Location”, when you are deciding on a new SOX provider you should be looking for “Experience, Experience, Experience.”

Experienced Staff:  At Holbrook and Manter, we have a team of professionals with valuable experience in the field.  Our team can assist your organization with many aspects in fulfilling your Sarbanes-Oxley requirements.

Experience in various industries:  Our team has experience in assisting public companies with their SOX work in various industries, including:  manufacturing, retail sales, food service, financial services, and agribusiness.

Experience in all aspects of SOX: We offer a risk based approach to Sox compliance and have experience in providing all aspects of Sox services.  These services include:

Project planning

Project management

Risk assessment

Control documentation and framework

Detailed control compliance testing

Remediation of control weaknesses

Evaluation of testing results

Experience, Experience, Experience – Holbrook and Manter is a leading SOX provider in Central Ohio with an experienced staff in the field.  Our team would love to sit down and learn more about your organization and discuss why we should be your chosen SOX Firm.

Don’t overlook securities laws when planning your estate

For a variety of estate planning and asset management purposes, many affluent families hold their assets in trusts, family investment vehicles or charitable foundations. If assets held in this manner include interests in hedge funds, private equity funds or other “unregistered” securities, it’s important to ensure that the entity is qualified to hold such investments.

Certain exemptions under the federal securities laws require that investors in private funds and other unregistered securities qualify as “accredited investors” or “qualified purchasers.”

What is an accredited investor?

Accredited investors include financial institutions and other entities that meet certain requirements, as well as certain officers, directors and other insiders of the entity whose securities are being offered. They also include individuals with either 1) a net worth of at least $1 million (excluding their primary residences), or 2) income of at least $200,000 in each of the preceding two years, and with a reasonable expectation of meeting the requirements in the current year.

A trust (including a foundation organized as a trust) can qualify as an accredited investor in one of three ways: 1.)Its assets are greater than $5 million, it wasn’t formed for the specific purpose of acquiring the securities in question and a sophisticated person directs its investments. 2.)A national bank or other qualifying financial institution serves as trustee. 3.) The trust is revocable and the grantor qualifies as an accredited investor individually.

Family investment vehicles are accredited investors if their assets exceed $5 million and they weren’t formed for the specific purpose of making the investment in question. Alternatively, they can qualify as accredited if all of their equity owners are accredited.

What is a qualified purchaser?

Individuals are qualified purchasers if they have at least $5 million in investments. Other qualified purchasers include:

  • An entity that has at least $5 million in investments, with all of its beneficiaries being either closely related family members; estates, foundations, or charitable organizations of such family members; or trusts created by or for the benefit of the family member described,
  • A trust that doesn’t meet the family exception above, so long as the trust wasn’t established solely for the purpose of making the investment, and every individual associated with the trust as either creator, contributor or investment decision-maker is considered a qualified investor, or
  • An entity with not less than $25 million in investments.

Determining whether a family entity is an accredited investor or a qualified purchaser can be complex, as there are nuances in the definitions. The information provided is intended to be a guideline — your specific circumstances could vary from the general rules. Holbrook & Manter can help. Contact us with any questions.

An Important Message for those in Agribusiness

By: Bradley Ridge, Managing Principal

Holbrook & Manter is committed to keeping our clients informed of changes that are taking place that could touch their financial dealings. A recent signing of a bill by the President prompted us to reach out to our agribusiness and farming clients. I wanted to share that communication with our blog readers as well, not only to explain what this bill means for those working in the agribusiness industry- but also to display our commitment to on-going communication with our clients. Please reach out to us with any questions or concerns you may have after reading the following. We are always here to help:


As we strive to fulfill our important role as your partner and advocate for tax planning, we want to reach out to you and share that the President signed a $1.3 trillion spending bill last Friday.  Among many other things, this Appropriations Act, provides a “grain glitch fix” to the provision in the Tax Bill that was passed in late 2017 that gave an unintended advantage to sell grain to a cooperative.  Please see below as we have included only a small portion of the official language in the Act…………………..but as only the government can, this is a rather complex fix.  We are still getting our minds around it and will have more to share this Spring/Summer but for now please accept this email as initial information for your planning. And if you have any questions please let us know.

Issue. The provision in Code Sec. 199A that provided farmers with a tax advantage for selling crops to farmer-owned cooperatives, but not for sales to private or investor-owned grain handlers, was, according to lawmakers, a mistake—the so-called “grain glitch”.

Glitch fix. The Appropriations Act makes significant changes to Code Sec. 199A(g)

Transition rules. The TCJA had repealed Code Sec. 199 for tax years beginning after 2017. However, the Appropriations Act clarifies that the repeal of Code Sec. 199 for tax years beginning after Dec. 31, 2017, does not apply to a qualified payment received by a patron from a specified agricultural or horticultural cooperative in a tax year beginning after December 31, 2017, to the extent such qualified payment is attributable to QPAI with respect to which a deduction is allowable to the cooperative under former Code Sec. 199 for a tax year of the cooperative beginning before Jan. 1, 2018. Such qualified payment remains subject to former Code Sec. 199, and any former Code Sec. 199 deduction allocated by the cooperative to its patrons related to such qualified payment is allowed to be deducted by such patrons in accordance with former Code Sec. 199. In addition, no deduction is allowed under Code Sec. 199A for such qualified payments. (Appropriations Act Sec. 101(c)(2), Division T)

Effective date. The changes under the Appropriations Act, except for those provided in the transition rules above, are effective for tax years beginning after Dec. 31, 2017. (Appropriations Act Sec. 101(c)(1), Division T)

The 4/15 Deadline Push

By: Dave Herbe, CPA- Senior Accountant

This is a very stressful time for anyone who is involved in the world of income taxes. With only weeks remain to timely file returns it can put a lot of pressure on tax preparers. It brings long hours and time away from family and friends. One thing to always remember and something we try to carry out at Holbrook & Manter is to find a stress relief during this busy time.

This could be anything from taking an hour of your day to hit the gym, or taking off a little early one night to spend some time with family to decompose from all the stresses that tax season brings. One thing we do at our office locations… we bring in “Tax Perk” lunch one day a week for our team members. We all try to eat lunch together and take time away from all the pressures that come with meeting the deadline.

I work out of our Columbus office, where we also have a putt putt league. Every Tuesday we go around and take our best shot at a few holes setup around the office. It gives us a chance to take our minds off of our work and try to have a little fun.

Over the next few weeks it will definitely be stressful and the only way to keep your sanity is to try to take some time to decompress from the stress that tax season brings. Good luck to anyone who is dealing with these same stresses as we approach the deadline! It will be over before we know it.

While we aim to find ways to relieve the stress of our busy season, client service remains our top priority. If you have tax questions or need assistance with your tax returns, Holbrook & Manter is a full service firm and would be happy to work with you!

Power of attorney abuse: What you can do about it

A financial power of attorney — sometimes called a “power of attorney for property” or a “general power of attorney” — can be a valuable estate planning tool. The main disadvantage is that it’s susceptible to abuse by scam artists, dishonest caretakers or greedy relatives.

Help or harm

The most common type is the durable power of attorney, which allows someone (the agent) to act on behalf of another person (the principal) even if the person becomes mentally incompetent or otherwise incapacitated. It authorizes the agent to manage the principal’s investments, pay bills, file tax returns and handle other financial matters if the principal is unable to do so as a result of illness, advancing age or other circumstances.

A broadly written power of attorney gives an agent unfettered access to the principal’s bank and brokerage accounts, real estate and other assets. In the right hands, this can be a huge help in managing a person’s financial affairs when the person isn’t able to do so him- or herself. But in the wrong hands, it provides an ample opportunity for financial harm.

Take steps to prevent abuse

If you or a family member plans to execute a power of attorney, there are steps you can take to minimize the risk of abuse:

  • Make sure the agent is someone you know and trust.
  • Consider using a “springing” power of attorney, which doesn’t take effect until certain conditions are met.
  • Use a “special” or “limited” power of attorney that details the agent’s specific powers.
  • Appoint a “monitor” or other third party to review transactions executed by the agent, and require the monitor’s approval of transactions over a certain dollar amount.
  • Provide that the appointment of a guardian automatically revokes the power of attorney.

Some state laws contain special requirements, such as a separate rider, to authorize an agent to make large gifts or conduct other major transactions.

Act now

If you have elderly parents who’ve signed powers of attorney, keep an eye on their agents’ activities. When dealing with powers of attorney, the sooner you act, the better. If you’re pursuing legal remedies against an agent, the sooner you proceed, the greater your chances of recovery. And if you wish to execute or revoke a power of attorney for yourself, you need to do so while you’re mentally competent. Contact us for additional details.

Your accountant is an important player when it comes to your trust & estate plans. Contact us today to get us involved in your planning process.

How Do I Set Up a Family Office?

A Quick Guide to Building Your Family Office Structure & Organizing Accounting

A family office office is essentially a private team dedicated to managing the finances of a wealthier family and high net-worth individuals. These wealth management entities help steer a family’s investments in the right direction and, in the United States, they are rapidly growing in popularity. But what does it take to open a family office? What practices should you employ and what tactics should you avoid?

Holbrook & Manter is here to help guide you along the way with some of the top tips for setting up a family office.

Establish What Your Family Office Offers

Family offices are typically classified into three different class depending on which services they offer.

  • Class A: Comprehensive financial oversight, estate management and objective fiscal consulting for a flat monthly fee.
  • Class B: Investment advice and consulting for an as-needed fee, but does not directly manage illiquid assets.
  • Class C: Basic estate and administrative (bookkeeping, mail sorting, etc.) and is run directly by the family.

Most family offices provide the following services:

  • Investment management
  • Wealth transfer management
  • Business advising & consulting
  • Estate planning
  • Education planning
  • Philanthropy & charity management
  • Bookkeeping, record keeping, reporting & communications
  • Legal, compliance & tax advising
  • Investment risk management

Create a Proper Funding Structure

The initial family office capital investment will be a large sum, however a structure must be set in place to cover costs over the course of time. Are different individuals investing more money than others or will you rely on a flat fee for all participating parties? These funds will go to further investments and additional outsourced financial services as needed.

What You Should Avoid When Direct Investing on Behalf of the Family

  • Making any contractual moves and major decisions without a lawyer’s review
  • Rushing into investments without performing in-depth research and leaning too heavily on third parties outside of the family for guidance
  • Investing your money into ventures that have stalled or shown signs of failure
  • Not balancing the objective best interests of the family, as a whole, with the voices of a few key influencers’ passions within the family
  • Not having a clear exit strategy for both well-performing assets and poorly-producing investments

Decide If It’s Worth It

This is a simple step for a complicated undertaking. While family offices can be effective in the long-term, they can be costly if not managed properly. Ask yourself the following:

  • Do I have enough professional connections to help navigate through the tough spots and make the best moves for the family?
  • Will I be able to dedicate myself fully to the needs of the family and solidify confidence throughout the entire process?
  • Is there enough up-front capital for this venture?

If yes to all, get in contact with an expert family office service provider, consult the family and start making moves!

These are just some of the best practices to follow when setting up a family office. For more information regarding our family office services and additional professional advising, contact Holbrook & Manter today!

Posted in News

Important Tax Deadlines for Q2 of 2018

April 17 — This day can be a double whammy for some folks…. besides being the last day to file (or extend) your 2017 personal return and pay any tax that is due, 2018 first quarter estimated tax payments for individuals, trusts and calendar-year corporations are due that day. Also due- 2017 returns for trusts, calendar-year estates and C corporations, FinCEN Form 114 (Report of Foreign Bank
and Financial Accounts [but an automatic extension applies to October 15]), and any
final contribution you plan to make to an IRA or Education Savings Account for 2017. In addition, Simplified Employee Pension and Keogh contributions are due today if you haven’t extended your return.
June 15 — Second quarter estimated tax payments for individuals, trusts and calendar-year corporations are due today.

Contact Holbrook & Manter today for assistance with your tax needs.