New federal exemptions, portability and common trust techniques explained at Ways & Means briefing
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Summary
Mark Langan told Ways & Means members that trusts are widely used to avoid probate and described grantor-trust rules, the evolution of federal estate exemptions, portability, and how donor-advised funds changed charitable giving.
Mark Langan, head of the probate and trust practice at Dinsey and section chair of the Vermont Bar Association’s probate and trust section, gave Ways & Means members a primer on trust types, federal tax rules and estate-tax history, using concrete examples to illustrate tax consequences.
Langan started with fundamentals: a trust typically involves a grantor (donor/settlor), a trustee (legal owner) and beneficiaries (equitable owners). He distinguished revocable trusts (amendable during life) from irrevocable and testamentary trusts (created by will and effective at death).
On federal income tax, Langan described "grantor" trusts: if the settlor retains certain powers, the trust’s income is taxed to the settlor under the rules he cited (identified during the briefing as sections he referenced in the 600s of the Internal Revenue Code). He illustrated the sometimes-surprising result of in-kind distributions: in one example a $9,000 car distributed from a trust triggered a K-1 reporting $5,000 of carried-out income for which the beneficiary owed tax.
Langan reviewed the federal estate-exemption history and its planning consequences, tracing changes from mid‑20th century exclusions through increases under the Tax Cuts and Jobs Act. He explained portability at the federal level (unused spousal exclusion can transfer to a surviving spouse) and warned that Vermont does not offer portability, so titling and state-level planning matter.
On charitable giving, Langan contrasted private foundations — which require administrative filings and typically must distribute about 5% annually — with donor‑advised funds. "Donor advised funds are great," he said, noting they lower administrative burden and are widely used through institutions including the Vermont Community Foundation and national brokerage-sponsored vehicles.
Committee members asked technical follow-ups about trustee deeds and titling; Langan advised that deeds and account registrations should name the trustee properly and cited a Vermont statutory provision that treats a transfer to a trust as if it had been conveyed to the trustee to avoid conveyancing errors.
The session closed with additional questions and committee members thanking the presenter; the committee did not take any formal votes.
