Tax Law Changes May Have Rendered Your Will or Trust Obsolete

If you’re married, it’s time to review your estate plan to determine if your will or revocable trust directs your assets into a credit shelter trust (CST).  Formerly the one-size-fits-all approach favored by most estate planning professionals to minimize taxes for couples, recent tax law changes rendered many CSTs unnecessary.  Moreover, under current law, credit shelter trusts may actually increase taxes. Scott Goldberger, J.D., of Kaufman, Rossin

Understanding the credit shelter trust

Each individual has an estate tax exemption, which, at death, can be used to shelter assets from estate tax.  Traditionally, wills or revocable trusts directed that, upon the death of the first spouse, assets equal in value to the exemption would pass to a CST and the balance of the first spouse’s assets would pass to or be held in trust for the surviving spouse. Upon the surviving spouse’s death, the CST assets, including any accumulated income and appreciation, would be excluded from the surviving spouse’s estate, escaping estate tax.  Without a credit shelter trust, if the surviving spouse inherited all of the assets and the combination of the inherited assets and the surviving spouse’s own assets exceeded her exemption, estate tax was incurred.  For this reason, estate planning professionals have typically recommended a CST for married couples whose combined assets were likely to exceed the exemption.

However, credit shelter trusts have a number of drawbacks:

  • If CST assets appreciate in the time between the deaths of the two spouses, heirs will bear the burden of higher income taxes.
  • Assuming the credit shelter trust earns more than a nominal income, a separate tax return must be filed annually.  Trusts pay income tax at the highest federal rate (currently 39.6%, plus a 3.8% surtax on net investment income) for ordinary income in excess of $12,150.  By comparison, an individual is not in the top tax bracket unless his income exceeds $406,750.
  • The beneficiaries of the CST after the surviving spouse’s death – typically children and grandchildren – are entitled to annual trust accountings.
  • Although the surviving spouse is permitted to be a trustee of the CST, distributions by the spouse to herself must be limited to an “ascertainable standard,” such as health, support and maintenance, to avoid adverse tax consequences.

Tax law changes

Under current law, a credit shelter trust is unnecessary for many couples. The estate tax exemption is now up to $5,340,000 per spouse and will increase for inflation in future years.  Moreover, the exemption is now “portable” between spouses, meaning that any exemption not used by the first spouse is generally available to the surviving spouse.  Portability eliminates estate tax, provided the surviving spouse dies with less than the combined value of both spouses’ exemptions.  That means, even without a CST, there would be no estate tax if the surviving spouse dies with $10,680,000 or less.

Even couples with assets in excess of $10,680,000 may be better off without a credit shelter trust.  For these couples, the usefulness of a CST in minimizing taxes is based on several factors, including, but not limited to, the following:

  1. The relative estate and income tax rates when the spouses die, including state income taxes to which the heirs may be subject
  2. The amount of time between the spouses’ deaths
  3. Rates of return on the couple’s investments
  4. The surviving spouse’s pattern of spending

Instead of locking yourself into a credit shelter trust, your will or trust can be revised to defer the decision after the first spouse’s death.  Then, the surviving spouse or personal representative, with the help of estate planning professionals, would determine based on information available at the time (e.g., relative tax rates, life expectancy of the surviving spouse, anticipated rates of return) whether a CST is beneficial.

A qualified estate planning professional can review your estate plan to ensure that a credit shelter trust does not wind up unnecessarily complicating your family’s lives or increasing taxes. Contact me or another member of our estate and trust team to learn if a credit shelter trust is right for you.


Scott Goldberger, J.D., is an estate and trust director in Kaufman Rossin’s Boca Raton office. Kaufman Rossin is one of the top CPA firms in the U.S. and offers a wide variety of services for high-net-worth individuals. Scott can be reached at


4 Things Bankers Need to Know About Proposed Anti-Money Laundering Law

Bank leaders, compliance officers and independent contractors would all face increased scrutiny and penalties under proposed anti-money laundering legislation. The “Holding Individuals Accountable and Deterring Money Laundering Act” (H.R. 3317) would strengthen anti-money laundering laws in the U.S. by increasing accountability, improving regulations and broadening government reach. The bill would allow the government to hold individuals – not just financial institutions – liable for violations of the Bank Secrecy Act (BSA).

The following are the four most important changes proposed by the bill: Jason Chorlins of Kaufman Rossin

1.  Promoting individual accountability

The proposed law emphasizes penalties for individuals over penalties for financial institutions. Among other things, it would raise the existing prison-sentence cap from five to 20 years for individuals convicted of any money laundering offense. Bank regulators would be empowered to take direct action against any banking executive, official or independent contractor (including attorneys, accountants, appraisers and consultants) who commits an infraction. Monetary penalties for individuals and financial institutions would increase, and individuals would be required to pay their own fines out-of-pocket.

2.  Broadening government reach

In an effort to increase accountability, the bill would permit the Financial Crimes Enforcement Network (FinCEN), which currently acts as an extension of the U.S. Department of the Treasury, to independently pursue legal action in anti-money laundering cases. It also gives the government more direct access to top banking executives in the event of a BSA violation.

3.  Encouraging information sharing

To incentivize compliance, the bill would increase rewards for whistleblowers and protect them against employer discrimination, now and in the future. It also broadens the definition of “safe harbor protection” to include all crimes, not only money laundering and drug-related offenses.

4.  Strengthening global enforcement

The Secretary of the Treasury would be tasked with developing and improving global anti-money laundering law enforcement and closing loopholes caused by differing international laws.

Proponents of the law believe that this is the best way to crack down on major financial institutions violating the BSA. They hope that, by implicating both persons and financial institutions, they will make the stakes for money laundering too high. Opponents believe that the bill’s stringent penalties for individuals could have career-ending implications; a punishment they don’t believe fits the crime. There is also concern that the bill would discourage job seekers from attaining positions in financial institutions where they could be implicated under H.R. 3317.

The bill, introduced in October by Rep. Maxine Waters (D-CA), was directed to the House Subcommittee on Crime, Terrorism, Homeland Security and Investigations last month.

If you have questions about AML compliance or other banking-related regulatory issues, please contact me or another member of our risk advisory services team.


Jason Chorlins, CPA, CFE, CAMS, CITP, is a risk advisory services manager in Kaufman Rossin’s Miami office.  Kaufman Rossin is one of the best accounting firms in the U.S. Jason can be reached


QuickBooks Tip: Hosting on the Cloud

Love your desktop version of QuickBooks but wish you could access it from anywhere? There is a solution! QuickBooks hosting allows an Intuit-authorized cloud service provider to maintain your QuickBooks software and data file on secure remote servers, so you can access the program on the go, and you don’t have to deal with maintaining it. Lori Bucci, CPA, of Kaufman, Rossin

Unlike QuickBooks Online, which is a web-based, limited version of Intuit’s traditional QuickBooks desktop package, hosting on the cloud allows you to use the robust desktop version of QuickBooks without having to worry about data backup and maintenance. You can access your QuickBooks software and data via a secure internet connection.

Intuit’s Hosting Program allows QuickBooks users to:

  • Install licensed copies of QuickBooks desktop software on servers in an authorized remote hosting facility
  • Use QuickBooks via a secure internet connection on a virtual desktop or through a web browser
  • Take advantage of all the benefits of QuickBooks with 24/7 access from anywhere you have an internet connection

Intuit-authorized providers undergo an in-depth screening process to verify that they meet and comply with the requirements necessary to safely and securely host Intuit software and data for businesses.

There are many benefits to hosting QuickBooks online, including:

  • Reliable, anywhere, anytime access to your QuickBooks
  • Business continuity in case there’s a problem at your site
  • Connectivity with remote offices or locations
  • Continuous, automated, off-site data backup
  • Reduced cost of hardware and technology needed to maintain the QuickBooks server on-site

If you would like to discuss QuickBooks hosting options and find the best fit for your business needs, contact me or another member of Kaufman Rossin’s QuickBooks ProAdvisors team.


Lori Bucci, CPA, is an entrepreneurial services manager in Kaufman Rossin’s Miami office and an Advanced QuickBooks ProAdvisor. Kaufman Rossin, one of the top CPA firms in the U.S., offers QuickBooks training,accounting  and consulting services for a variety of industries. Lori can be reached at


FIBA’s 2014 AML Compliance Conference: Asking the Tough Questions

Compliance officers, regulators and other banking industry professionals recently gathered at the 2014 Florida International Bankers Association (FIBA) Anti-Money Laundering Conference to discuss “what’s new” in the anti-money laundering (AML) regulatory environment. Nick Hartofilis of Kaufman Rossin

The conference began with a tribute to Clemente Vazquez-Bello, Esq. (1950-2013), who was instrumental in helping the industry shape the future of anti-money laundering policies and initiatives.   Having served as chairman of FIBA’s annual AML Compliance Conference since its inception in 2001, Vazquez-Bello was known for asking the regulatory agencies the “tough questions” on AML compliance. He would have been proud of the spirited and passionate discussion that occurred at this year’s conference.

The following are some key takeaways from FIBA’s 2014 AML Compliance Conference:

Beware of subject matter enthusiasts

While enthusiasm is encouraged, ensure that the individuals responsible for overseeing and implementing your AML program are properly trained on AML regulatory requirements and the financial institution’s own internal controls and procedures.  Training should include practical examples of money-laundering and other suspicious activities.

Trend in individual liability

Are we seeing a growing trend in sanctions against AML compliance officers?  Recent enforcement actions against compliance officers were a hot topic at the conference. Proposed anti-money laundering legislation (H.R. 3317) would allow the government to hold individuals – not just financial institutions – liable for violations of the Bank Secrecy Act (BSA).

The industry concern is that qualified professionals may not pursue compliance officer roles given an increased risk of individual liability and tough enforcement actions. Regulatory agencies emphasized that they do not want to push top talent away from compliance officer roles. They said the following key factors are often considered prior to taking action against an individual for AML compliance failures:

  • What is the activity’s impact on the markets?
  • Was the individual aware of the conduct?
  • Was this an isolated incident or a systemic breakdown?
  • Has the individual been cited in the past for similar conduct?

AML risk assessment: Don’t check your common sense at the door

Many of the recent regulatory actions against financial institutions contain provisions requiring improvements of AML and Office of Foreign Assets Control (OFAC) compliance programs.  In many of these actions, risk assessments did not adequately address the major AML risk areas of the firm.  Keeping the risk assessment simple but adequate to cover the risks at the firm and developing  standard procedures that can be used across the firm are critical.

Here are some additional considerations for your risk assessment:

  • Use the risk assessment to drive the allocation of your compliance resources.
  • An effective risk assessment can guide the AML program in developing appropriate controls/procedures and identifying areas for increased testing.
  • Develop training that addresses the risks identified through the assessment.
  • Continually update the assessment to reflect new guidance, businesses and industry regulatory trends.
  • On a quarterly basis, present the board with any material changes to the program.

If you have questions about anti-money laundering compliance or other regulatory issues, please contact me or another member of our risk advisory services team.


Nick Hartofilis, CPA, CRCP, CAMS, is a director in Kaufman Rossin’s Boca Raton, Florida, office. Kaufman Rossin is one of the top CPA firms in the U.S. and offers anti-money laundering compliance consulting services to the financial services industry. Prior to joining the Firm, Nick was responsible for supervising FINRA’s national specialist unit that monitored broker-dealers for AML compliance. Nick can be reached at


The Time is Now to Upgrade Your COSO Internal Controls Framework!

For more than two decades, companies of all sizes in the U.S. and abroad have designed, implemented and assessed their internal controls using the 1992 publication of COSO’s Internal Control – Integrated Framework. To this day, it remains fundamentally sound and broadly recognized as the leading guidance for effective internal control systems. But that’s about to change.Justin Gwin of Kaufman Rossin

The business world has transformed over the past 20 years – technology has drastically evolved, markets have expanded, business structures have become more complex, and large-scale, highly publicized control failures have occurred. These changes have led the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to update its Integrated Framework, which will supersede the previous publication as of December 15, 2014, and become the new standard for internal controls.

What’s the same in the new Framework?

The new Framework is actually very similar to the 1992 version. It retains the core definition of internal control, the five components of internal control and the cube model. The requirement that all five components must be present and functioning for an effective system of internal control also remains unchanged. Furthermore, the Framework continues to emphasize the need for management to use judgment.

What’s changed in the new Framework?

The most prominent update to the new 2013 Framework is the clarification of fundamental concepts from the original publication. The concepts are now explicitly defined as 17 principles that form the five components of internal control (summarized below). These principles provide transparency and completeness for each component. The Framework also includes “Points of Focus” that characterize the principles.

Effective internal control entails that an organization follows these 17 principles:

  • Control Environment
      1. Demonstrates commitment to integrity and ethical values
      2. Board of directors demonstrates independence and exercises oversight
      3. Establishes structure, authority, reporting lines and responsibility
      4. Commitment to attract, develop, and retain competent individuals
      5. Enforces accountability for internal control responsibilities
  • Risk Assessment
      6. Specifies suitable objectives with sufficient clarity
      7. Identifies and analyzes risk
      8. Assesses potential fraud risk
      9. Identifies and analyzes significant change
  •  Control Activities
      10. Selects and develops control activities to mitigate risks
      11. Selects and develops general controls over technology
      12. Deploys controls through establishment of policies and procedures
  •  Information and Communication
      13. Uses relevant, quality information to support function of internal control
      14. Communicates internally
      15. Communicates externally
  •  Monitoring
      16. Conducts ongoing and/or separate evaluations
      17. Evaluates and communicates deficiencies and takes corrective action

In addition to the principles listed above, updates to the 2013 Framework include:

  • Increased reliance on IT controls
  • Greater expectations for governance oversight
  • Explicit consideration of fraud during risk assessment
  • Consideration of the effect of expanded relationships on internal controls
  • Widening of the reporting objective to incorporate internal and external, as well as financial and non-financial reporting

COSO’s long-awaited Internal Control–Integrated Framework update will make it easier for companies to design and implement effective internal controls while accounting for the challenges that businesses face today. For help assessing and upgrading your company’s internal control systems, please contact me or another member of our risk advisory team.
Justin Gwin, CPA, CISA, is a risk advisory services manager in Kaufman Rossin’s Miami office. Kaufman Rossin is one of the top CPA firms in the U.S. and offers internal controls consulting and evaluations for a variety of industries. Justin can be reached at