Cavitch Familo & Durkin, Co., L.P.A. FindLaw IM Template 2026-06-29T15:57:02Z https://www.cavitch.com/feed/atom/ WordPress /wp-content/uploads/sites/1603528/2022/05/cropped-cavitch-site-icon-32x32.jpg by William Hatt <![CDATA[Stablecoins, Private Lending, and Regulatory Reality in 2026]]> https://www.cavitch.com/?p=257301 2026-06-24T17:51:38Z 2026-06-29T13:00:51Z SEC Treatment: Stablecoins Are (Mostly) Not Securities Under current federal guidance, properly structured stablecoins used for payment purposes are not treated as securities. In April 2025, the SEC issued a Staff Statement clarifying that “Covered Stablecoins” – those fully back 1:1 by U.S. dollars, non-interest-bearing, and used solely as a payment mechanism – do not qualify as securities. This position aligns with the anticipated framework of the proposed GENIUS Act, which would formally exempt payment stablecoins like USDC from securities regulation once enacted (expected rollout in 2026-2027). As a result, an individual may loan stablecoins to another person and receive repayment in U.S. dollars or another digital asset without triggering SEC registration requirements, so long as the transaction is private and not part of a broader lending platform or investment product.

Taxes Are the Real Regulatory Hook

While SEC oversight is limited, the IRS is very involved. The IRS treats stablecoins as property – not currency – meaning nearly every stage of a loan has tax consequences:
  • Repayment in USD is treated as a disposal of the stablecoin, potentially triggering capital gains or losses.
  • Repayment in another cryptocurrency (e.g., lending USDC and receiving Bitcoin) is treated as a crypto-to-crypto exchange, with capital gains calculated at the time of receipt.
  • Interest payments, whether in USD or crypto, are taxed as ordinary income.
Private lenders must self-report interest income and any dispositions of digital assets, typically on Schedule 1 (Form 1040) and Form 8949. If you use a lending platform, they are now required to send you a Form 1099-DA, with a duplicate going straight to the IRS. While these forms currently focus on your total sales (gross proceeds), starting in 2026, they will also track your "cost basis" (what you originally paid) for each specific wallet. Essentially, the IRS is moving toward automated tracking, and the days of "estimating" your crypto gains are over.

Where the Line is Drawn

Importantly, the regulatory risk increases when lending activity becomes a business model rather than a private transaction. Platforms offering interest-bearing stablecoin products may still be treated by the SEC as issuing investment contracts, requiring registration and compliance with federal securities laws. In fact, the regulatory boundary isn’t just about ‘how much’ you lend, but ‘how’ you lend it. Under the 2026 interpretation of the GENIUS Act, as long as you aren’t acting as an ‘unregistered broker’ – meaning you aren’t facilitating loans for others or promoting a yield product to the public – you remain in the clear. The moment you offer your lending ‘services’ to the public, the SEC’s registration requirements (and the heavy fines associated with them) kick in.

Bottom Line

Private stablecoin lending is currently permissible under federal securities law, but it is not tax-free, nor regulation-free. Structure, scale, and purpose matter – and the shift from personal use to business activity can dramatically change the compliance landscape. The compliance landscape for digital assets is moving faster than ever. If you are leveraging stable coins for private financing or business transactions, clear boundaries are your best defense against heavy fines and tax surprises. At [nap_names id="FIRM-NAME-2"], we can help bridge the gap between traditional corporate finance and the realities of the evolving regulatory landscape for digital assets. Contact us for more information.]]> by Jennifer Molnar <![CDATA[Drafting for Durability and Flexibility: Charitable Intent Requires More Than Good Intentions]]> https://www.cavitch.com/?p=257299 2026-06-17T15:59:22Z 2026-06-17T15:56:32Z
  • Avoid overly narrow restrictions. Gifts tied to highly specific criteria can create challenges at the time of distribution. The issue is not whether the objective is meaningful, but whether it can be carried out under the legal and institutional framework in place at that time. Framing the gift around a broader purpose can help reduce the risk of delay, refusal, or modification.
  • Emphasize purpose over precision. A strong charitable provision should clearly express both what the gift supports and why. Defining the underlying purpose provides guidance if the gift must later be interpreted or adjusted and helps preserve alignment with your intent.
  • Build in flexibility. Charities evolve, and legal requirements change. Including language that allows for reasonable adjustment, such as trustee discretion or compliance provisions, can help ensure your broader goals are preserved.
  • Plan for contingencies. Including an alternate recipient or charitable purpose helps ensure your assets remain directed to causes you support.
  • Revisit charitable provisions regularly. Periodically confirming that both the chosen beneficiaries and the associated restrictions remain workable helps ensure your plan continues to reflect your intent and current realities.
    • Charitable bequests are more than planning tools—they are a reflection of the legacy you want to leave and the impact that matters most to you. Because these gifts are so personal, they deserve more than good intentions; they require thoughtful drafting and careful attention to how they will function over time. When structured with clarity, flexibility, and long-term practicality in mind, a charitable gift is far more likely to carry out not just the donation, but the purpose behind it. If your estate plan includes a charitable bequest—or if you are considering one—now is the right time to ensure those provisions remain workable and aligned with both current law and your long-term goals. A thoughtful review today can help protect what matters most: your intent, your impact, and the legacy you hope to leave. At Cavitch, our estate planning team understands the deeply personal nature of charitable giving and is ready to help review your plan or develop a strategy that ensures your charitable intent endures.]]>         by Milica Prica <![CDATA[Using an LLC as a Legacy Planning Tool for Family Vacation Homes]]> https://www.cavitch.com/?p=257297 2026-06-08T16:10:32Z 2026-06-08T16:09:50Z For many families, a vacation home is far more than just real estate. It is a place where traditions are built, stories are shared, memories are made, and generations connect. However, without thoughtful planning, these cherished properties can become a source of conflict or even be lost altogether.  One increasingly popular and highly effective strategy is placing the vacation home into a trust-owned limited liability company (LLC). The operating agreement is a rulebook for how the vacation home is owned, used, and managed. 

    The Operations

    In an LLC structure, control is centralized through a manager, rather than requiring unanimous agreement among potentially many family members. This allows for efficient handling of repairs, insurance and operations; one point of contact for vendors and legal matters; and defined voting rights for major decisions. The company’s operating agreement also sets out rules for when the property can be used, rented, etc.  When a vacation home is owned individually, it can easily be fragmented or forced into sale due to divorce, creditors, or inheritance disputes. An LLC keeps ownership consolidated within a defined group and can restrict transfers to non-family members. Further, future owners must agree to the terms of the operating agreement, limiting their rights to the property if they don’t.  The operating agreement further provides a framework for future generations to step in as owners. When a member passes away, their ownership interest can be transferred to their estate plan. Successors can become full members only if they agree to the governing terms. 

    The Trust

    While the operating agreement controls how ownership works, the trust controls how ownership passes. Instead of individuals directly owning the LLC membership interests, the original owner’s revocable trust owns those interest. This is critical because the document determines how those interests are divided upon death.  One of the biggest advantages is that trust-owned interests pass outside of probate. That means no court-supervised transfer process, no delays that can tie up ownership for months or longer, and greater privacy and efficiency in administering the estate. For shared vacation homes, this is especially important because it avoids situations where no one has explicit authority to manage or use the property before or during the probate process, bills or maintenance get delayed, and family members are left in limbo.  When properly structured, upon the death of the trust creators and original owners, the trust splits the assets into separate shares for beneficiaries. The beneficiary of each trust share can then step into ownership subject to the operating agreement. Further, instead of deeding the original owner’s interest into as many equal shares as they have beneficiaries which creates multiple new fractional title interests in the real estate, the LLC interests simply split instead, while the LLC continues to own the property as a single, unified asset. This means the ownership of the property itself does not change (the LLC remains on title). Only the ownership of the LLC changes behind the scenes.

    Why This Works So Well

    Independently, each tool is useful. Together, they are powerful. The operating agreement provides governance, structure, and family rules. The trust provides efficient, probate-free transfer of ownership across generations. This results in a system where the family vacation home is efficiently managed, and ownership transitions are smooth and controlled such that the property can remain a lasting family asset rather than becoming a burden.   Contact the experienced attorneys at [nap_names id="FIRM-NAME-2"] to set up your family vacation home LLC today. ]]>         by Hannah Mahaffey <![CDATA[AI Assisted Hiring: What Employers Need to Know About Discrimination Risks]]> https://www.cavitch.com/?p=257233 2026-06-02T17:17:37Z 2026-06-02T17:17:37Z Employers are increasingly using AI-assisted tools to screen resumes, rank applicants, evaluate video interviews, and identify candidates who appear to be the “best fit” for a role. While these technologies may improve efficiency, they also create significant legal risks that many employers may not fully anticipate. One of the biggest concerns is that AI hiring tools can unintentionally perpetuate discrimination. Many AI systems are trained using historical hiring data, meaning the technology learns patterns from an employer’s past hiring decisions. If those historical decisions reflect unconscious bias or disproportionate exclusion of certain groups, the AI system may replicate those same outcomes. To address these concerns, the Equal Employment Opportunity Commission (“EEOC”) created the Artificial Intelligence and Algorithmic Fairness Initiative, which examines how employers’ use of AI and other automated systems may implicate federal anti-discrimination laws and provides guidance regarding the lawful use of those technologies in the workplace. Information on this initiative can be found here.  Importantly, the EEOC has taken the position that employers may still face liability under federal anti-discrimination laws even when hiring decisions rely on AI-assisted tools developed or administered by third-party vendors. The EEOC’s fact sheet on this can be found here. The EEOC has warned that employers may violate Title VII where AI-assisted hiring tools disproportionately screen out applicants based on protected characteristics such as race, sex, or national origin, even absent any express intent to discriminate. Given that these technologies are often used to evaluate large numbers of applicants simultaneously, discriminatory outcomes may occur on a broader scale and may be more difficult for employers to detect if the underlying systems are not properly monitored or audited. The EEOC has also made clear that monitoring AI-assisted hiring is an enforcement priority. In EEOC v. iTutorGroup, Inc., the EEOC alleged that an automated hiring system rejected older applicants based on age by programming its software to automatically reject female applicants age 55 or older and male applicants age 60 or older. The matter ultimately settled for $365,000. Additional details about this case can be found here.  More recently, a case in California, Mobley v. Workday, Inc., has drawn national attention. In that case, the plaintiff alleged that Workday’s AI-powered applicant screening tools discriminated against applicants based on race, age, and disability in violation of federal anti-discrimination laws. More about this case and the roadmap of its litigation can be found here. This case is significant because it raises questions about whether software vendors themselves may face liability. The important takeaway: employers cannot simply rely on third-party AI vendors without independently evaluating whether those systems create discriminatory hiring outcomes or disproportionately screen out protected groups. The ADA also presents unique risks in the AI hiring space. According to guidance issued by the U.S. Department of Justice, AI-driven technologies may unlawfully screen out qualified individuals with disabilities if they are not properly designed or monitored. For example, software that evaluates speech patterns, facial expressions, eye contact, or response timing during video interviews may disadvantage applicants with speech impairments, neurological conditions, anxiety disorders, or other disabilities. Likewise, timed assessments or computer-based testing may violate the ADA if employers fail to provide reasonable accommodations. The DOJ further emphasized that employers are still responsible for ensuring their hiring technologies comply with the ADA, regardless of whether the systems are administered internally or through outside vendors. Details of the DOJ’s guidance on this issue can be found here. Although there is potential risk, AI is here to stay, and employers must adapt or be left behind. So, what are some simple things employers do to mitigate against this risk in using AI-assisted technologies in hiring? 
    • Carefully vet AI vendors and examine any contracts with AI vendors regarding indemnification, waivers, insurance provisions, and apportionment of liability.
    • Ask questions and understand how AI hiring tools are trained and evaluated. 
    • Regularly test for adverse impact on protected groups.
    • Maintain meaningful human oversight regarding the hiring process.
    • Ensure that applicants have a way to request accommodations during the hiring process. 
    The Employment Attorneys at Cavitch, Familo & Durkin are closely monitoring the use of AI in the employment lifecycle and are hosting an AI In The Workplace Panel discussion to further this conversation. This event will bring together legal and business professionals to discuss the practical realities of implementing AI in the workplace, the evolving legal and ethical considerations surrounding its use, and what employers can do now to prepare for the future of work. To attend the event, sign up here.]]>         On Behalf of Cavitch Familo & Durkin Co., L.P.A. <![CDATA[Hal Maxfield Recognized Among America’s Top 50 Lawyers for Corporate Law]]> https://www.cavitch.com/?p=257224 2026-05-14T14:56:24Z 2026-05-14T14:54:21Z Hal Maxfield has been named to the list of America’s Top 50 Lawyers for Corporate Law in Ohio. This honor is reserved for attorneys who demonstrate an exceptional level of legal skill, professional reputation, and commitment to their practice area. As a seasoned advocate for businesses across the region, Hal serves as the Managing Partner of the firm and Chair of the Associate Group. He remains a cornerstone of both the Business Law and Real Estate practice groups, and this selection reflects a career dedicated to navigating complex corporate transactions and providing strategic counsel to business owners and stakeholders. The "Top 50 Lawyers" designation involves a rigorous vetting process that identifies the most accomplished legal professionals in each state. Hal’s inclusion underscores his position as a leader in the Ohio legal community and his unwavering focus on delivering excellence in every matter he handles. Please join us in congratulating Hal on this significant professional milestone.

    About the Firm

    Celebrating over 140 years of service, our firm legal counsel to individuals and businesses throughout Ohio. With a focus on multiple practice areas such as Business Law, Estate Planning, Real Estate, and Litigation, we remain committed to the principles of integrity and client-focused advocacy.]]>         by William Hatt <![CDATA[The Future of Non-Competes in Ohio: What Employers Need to Know in 2026]]> https://www.cavitch.com/?p=257187 2026-05-06T17:55:32Z 2026-05-06T17:54:59Z There was confusion in recent years over the enforceability of non-compete agreements due to the FTC’s focus on the topic. However, after the dust from litigation settled, the legal landscape remains largely unchanged. State law still controls, and Ohio offers employers broad non-compete protection as compared to other states. 

    The Nationwide Ban is Dead

    On May 7, 2024, the FTC published its Non-Compete Rule (the “Rule”) prohibiting employers from entering non-competes with workers on or after September 4, 2024. The FTC’s Rule was immediately challenged. In Ryan, LLC v. FTC, the plaintiff filed suit in the Northern District of Texas challenging the FTC’s authority to conduct substantive rulemaking regarding “unfair methods of competition” and claiming the Rule was arbitrary. 746 F. Supp. 3d 369. The Northern District of Texas found that the FTC did not have the power to create substantive rules regarding unfair competition and ruled that the noncompete ban was “unreasonably overbroad” based on its “one-size-fits-all” approach. Id. In Properties of the Villages v. FTC, the Middle District Court of Florida issued a preliminary injunction against the FTC, preventing the enforcement of the Rule, holding that Congress had not explicitly given the FTC the power to regulate noncompete agreements. Props. of the Vills., Inc. v. FTC, 2024 U.S. Dist. LEXIS 151982. Although the FTC appealed both decisions, in September 2025, it dismissed its appeals in Ryan and Properties of the Villages and acceded to the vacatur of the Rule. In February 2026, the FTC officially removed the non-compete rule from the Code of Federal Regulations. 

    Shift to "Case-by-Case" Enforcement

    While there is no blanket federal ban, the FTC has not walked away from the issue entirely. The current strategy is individualized enforcement under Section 5 of the FTC Act. For instance, the agency has created a Joint Labor Task Force intended to coordinate investigations and enforcement actions related to labor market competition. Recently, such enforcement actions have focused on specific companies that use overly broad non-competes, particularly those affecting low-wage workers or specialized sectors like healthcare and pest control.  There are several recent and notable examples. In November 2025, the FTC challenged Gateway Services due to their blanket imposition of noncompete agreements for almost all of their 1,800 employees without a procompetitive reason for the lack of individualized consideration of the employees’ roles. In February 2026, the FTC ordered building services contractor Adamas Amenity Services LLC to cease enforcement of no-hire agreements, which Adamas was using to restrict building owners and management companies across New York City and New Jersey from directly hiring workers employed by Adamas. In April 2026, the FTC ordered Rollins, Inc. (the parent of Orkin) to void non-compete agreements for over 18,000 employees, signaling that they will still dismantle agreements they deem "unfair" on an individual basis. Rollins’s noncompete agreements typically prohibited employees from working in the pest-control industry for two years after ending employment with Rollins and further prohibited industry work within a 75-mile radius from one of Rollins’ more than 700 locations in the U.S.

    State Law Controls

    Because of the Rule’s failure, the enforceability of your non-compete depends almost entirely on state law. In states like California, Minnesota, Oklahoma, and North Dakota there remains a ban on nearly all non-competes. Other states (including Colorado, Washington, and Virginia) have passed laws in 2025 and 2026 that prohibit non-compete clauses for workers earning below a certain salary (often ranging from $100k to $150k). Several states have recently adopted industry specific bans on noncompete agreements, such as Pennsylvania, Maryland, and Rhode Island, who have banned or limited the use of non-competes for healthcare professionals. Ohio is one of fewer than a dozen states without legislation limiting non-compete agreements and instead relies on the 1975 Ohio Supreme Court decision Raimonde v. VanVlerah to assess whether a restrictive covenant is reasonable and based upon a protectable business interest. However, this regime may soon change. In February 2025, Ohio state senators introduced Senate Bill 11 to ban noncompete agreements that restrict workers’ post-employment and provide them with the right to take legal action against employers. The bipartisan legislation would also void non-compete agreements entered into or modified after the bill’s effective date. Similarly, Senate Bill 301, which was introduced in October 2025, proposes to prohibit nonprofit hospitals from enforcing non-complete agreements against certain healthcare workers, except for a limited restriction of no more than six months within a 15-mile radius of the specific employment location. Taken together, these proposals signal growing momentum toward limiting – or potentially eliminating – noncompete agreements in Ohio. 

    What Ohio Employers Should Consider Regarding Non-Competes

    In general, the enforceability of a non-compete in Ohio, as well as through FTC investigation, depends on the reasonableness of the agreement and whether it is narrowly tailored to protect against unfair competition. Employers should consider these questions when deciding whether to ask an employee to sign a non-compete agreement.
    • Scope of the Restriction: Courts scrutinize whether non-compete agreements are reasonable in duration, geographic scope, and the scope of the restricted activity. 
      • Duration: Ohio courts routinely enforce non-compete agreements related to employment of up to one year, and in some instances, up to two years. If the sale of a business is involved, up to five years is enforceable. 
      • Geographic Scope: The geographic scope should be limited to areas where the employer does business or is in active preparation to conduct business. 
      • Prohibited Conduct: The employee should only be prohibited from performing work that is actually competitive with the employer. 
    • The Worker’s Role & Level of Authority: Senior executives with decision-making authority are treated differently than employers with lower levels of authority.
    • Access to Confidential Information & Trade Secrets: If any employee has access to confidential information that would result in unfair competition in the hands of competitors, courts are more likely to enforce non-compete obligations. 
    • Use of Less Restrictive Means: Employers should consider whether non-solicitation, confidentiality, and non-disclosure agreements could achieve the desired result without limiting the employee from earning a living in their chosen occupation. 
    The attorneys at [nap_names id="FIRM-NAME-2"] can help navigate this fragmented regulatory environment and help protect your interests. Contact us today at 216-621-7860.]]>         by John Tullio <![CDATA[Trusts as Beneficiaries of Retirement Accounts After SECURE 2.0: Asset Protection in a 10-Year World]]> https://www.cavitch.com/?p=257062 2026-04-22T19:03:38Z 2026-04-22T19:03:38Z The SECURE Act and SECURE 2.0 Act brought major changes to retirement accounts. Most beneficiaries can no longer use the “stretch IRA” for long-term tax deferral. Instead, they now face a 10-year deadline to withdraw funds.  At first, it might seem less useful to name a trust as the beneficiary of a retirement account.  In fact, trusts remain a strong way to protect assets, retain control, and plan for future generations, as long as they are carefully drafted. This article looks at why trusts are still important in retirement account planning and highlights the key rules you need to follow to stay compliant and protect assets.

    Why Name a Trust as Beneficiary?

    Asset Protection from Creditors and Divorce An outright distribution of retirement assets to a beneficiary exposes those funds immediately to:
    • Creditor claims
    • Divorce proceedings
    • Bankruptcy risk
    By contrast, a properly structured trust can:
    • Keep assets in a protected environment
    • Restrict distributions to an ascertainable standard (or full trustee discretion)
    • Shield inherited retirement proceeds from beneficiary-level liabilities
    This matters even more now, since distributions usually have to happen within 10 years. That means large amounts of money may be paid out quickly. Protection from Beneficiary Mismanagement The 10-year rule often results in accelerated distributions, increasing the risk that beneficiaries:
    • Spend imprudently
    • Fail to tax plan
    • Liquidate assets at inopportune times
    A trust allows:
    • Staggered or discretionary distributions
    • Professional or fiduciary oversight
    • Tax-aware distribution strategies
    Control Over Timing and Tax Strategy Even though the account must be emptied within 10 years, the timing of distributions within that window still matters.  With a trust, the beneficiary can:
    • Accumulate distributions in lower-income years
    • Coordinate distributions with the beneficiary’s tax bracket
    • Avoid large lump-sum recognition in year 10
    This approach is especially helpful for beneficiaries who have high incomes. Multigenerational Planning Giving assets directly to beneficiaries removes your control. Using a trust lets you keep managing the assets for future generations.
    • Continued dynasty-style management
    • GST planning (where applicable)
    • Preservation of wealth beyond the initial beneficiary

    The SECURE Framework: What Changed?

    Under the SECURE regime, Eligible Designated Beneficiaries (e.g., surviving spouses, minor children, disabled individuals) may still stretch distributions, but Non-Eligible Designated Beneficiaries are subject to the 10-year rule for distributions. For most planning scenarios involving children or more remote family members, the trust will be treated as a Non-Eligible Designated Beneficiary, meaning the entire retirement account must be distributed by December 31 of the 10th year following the participant’s death.  Additionally, proposed and final regulations have clarified that if the decedent died after their required beginning date, annual RMDs may still be required during the 10-year period, not just a lump sum in year 10.

    Qualifying the Trust: “See-Through” Requirements

    To ensure the trust is treated as a designated beneficiary, it must qualify as a see-through trust.  To qualify as such, the trust must:
    1. Be valid under state law
    2. Be irrevocable (or become irrevocable upon death)
    3. Have identifiable beneficiaries
    4. Require the Trustee to provide the required documentation to the plan administrator or account custodian
    If the trust does not meet these requirements, default rules will apply, potentially leading to even faster distributions and, consequently, more rapid taxation.

    Drafting for Asset Protection Under the 10-Year Rule; Conduit Trusts & Accumulation Trusts

    When deciding whether to structure a see-through trust as a conduit trust or an accumulation trust, let us consider the primary difference between the two, namely, when (or if) distributions from the plan or account must be further distributed to the beneficiary of the trust.  Conduit trusts require all retirement distributions to pass directly to the beneficiary, whereas accumulation trusts allow the trustee to retain distributions within the trust, thereby preserving creditor protection for the amount received. While conduit trusts were historically favored to preserve “stretch” treatment of a plan or account based on a beneficiary’s life expectancy, with so few beneficiaries qualifying for stretch treatment, many practitioners are turning to accumulation trusts.  If properly drafted, most beneficiaries will still have a 10-year period to withdraw funds from the account, with the accumulation trust providing asset protection during that period and beyond.

    Final Thought

    For additional information on whether designating a trust as the beneficiary of your retirement plans or accounts may be appropriate in your circumstances, please feel free to contact John R. Tullio, Esq. at (216) 621-7860, or by email at jtullio@cavitch.com.]]>         by Milica Prica <![CDATA[The Benefits of Using a Trust to Own a 529 Education Savings Plan]]> https://www.cavitch.com/?p=257011 2026-03-31T17:53:41Z 2026-03-31T17:53:41Z For many families, one of the most meaningful financial goals is helping children or grandchildren afford an education. Whether it’s college, private school, or even future graduate studies, the desire to create opportunity through education is often a central part of long-term planning. In our estate planning practice, this goal comes up frequently. One of the most effective tools we recommend is the 529 plan. Not only do these plans offer significant tax advantages, but they can also be thoughtfully integrated into a broader estate plan, including ownership by a trust.

    What Is A 529 Plan?

    A 529 plan is a tax-advantaged savings vehicle designed specifically for education expenses. These plans are sponsored by states and allow funds to grow over time for a designated beneficiary, such as a child or grandchild. Contributions are made with after-tax dollars, and the funds are thereafter invested and grow tax-free. Withdrawals are tax-free when used for qualified education expenses. Qualified expenses generally include tuition, room and board, books, and certain technology costs. In some cases, 529 plans can be used for K-12 tuition and limited student loan repayment.

    Why Families Are Drawn To 529 Plans

    529 plans are popular because they combine flexibility with strong tax benefits:
    • Tax-free growth and withdrawals for qualified expenses
    • High contribution limits, making them useful for long-term planning
    • Control retained by the account owner, not the beneficiary
    • Ability to change beneficiaries within the family if circumstances change
    For grandparents, 529 plans can be a powerful way to contribute to a grandchild’s future while also engaging in strategic gifting.

    Can A Trust Own A 529 Plan?

    One aspect of 529 plans that is often overlooked is who owns the account. While many plans are owned individually (for example, by a parent or grandparent), a trust can also serve as the owner of a 529 plan. This opens the door for more sophisticated planning. When a trust owns a 529 plan:
    • The trustee controls the account, rather than the individual donor
    • The plan can be managed in accordance with the terms of the trust
    • It allows the 529 plan to be integrated into a broader estate and legacy plan

    Benefits To Trust-Owned 529 Plans

    Additional benefits to a trust-owned 529 plan include:
    • Tax-Benefits Across Generations. A trust-owned 529 plan can be structured to benefit multiple generations. If funds are not fully used by one beneficiary, they can continue to grow and be used without necessarily triggering additional gift, estate, or generation-skipping transfer taxes, depending on how the plan is implemented.
    • Beneficiary Flexibility. If the original beneficiary does not need all the funds, the trustee can change the beneficiary to another qualifying family member, such as a sibling or a cousin.
    • Rollover Options. Under the SECURE 2.0 ACT, up to $35,000 of unused 529 funds may be rolled over into a Roth IRA for the benefit of the designated beneficiary, subject to applicable requirements and limitations.
    • Authorization to Manage Investments. The trustee should have the ability to have investment powers and to make the selection among the various investment options in a 529 plan.

    Final Thoughts

    Saving for education is one of the most common and most meaningful goals families have. A 529 plan provides a tax-efficient and flexible way to achieve that goal, and when appropriate, structuring ownership through a trust can add an additional layer of control and protection. As with most estate planning strategies, the key is customization. What works best will depend on your family dynamics, financial goals, and overall estate plan. If you’re considering setting up a 529 plan, or what to explore how it fits into your estate plan, contact the experience estate planning attorneys at [nap_names id="FIRM-NAME-2"] to discuss the structure that best meets your goals.]]>         by James Disantis <![CDATA[Trust Taxation: Different Ways a Trust Can Be Taxed and How to Use Them to Your Estate Plan’s Advantage]]> https://www.cavitch.com/?p=257006 2026-03-25T15:59:34Z 2026-03-25T15:59:34Z April 15th is a date that causes anxiety and distress for millions of people every year. Dealing with your personal income taxes can be daunting enough, but when you have a trust to account for as well, the added intimidation and stress can be overwhelming. Understanding how your trust can be or will be taxed, however, is vital to ensure that you are getting the most out of your estate plan. It is something to be embraced rather than dreaded, because understanding your options is a valuable tool that can be used to your and your beneficiaries’ advantage.  At the most basic level, a trust’s income can be taxed three ways:
    1. Taxed to the Grantor;
    2. Taxed to the trust; or
    3. Taxed to the beneficiary(ies).
    Which of these ways a trust is taxed depends on the type of trust, which can also be categorized in one of three ways for income tax purposes:
    1. Grantor trust;
    2. Simple trust; and
    3. Complex trust.
    Each type has its own benefits, but a trust isn’t locked into just one type forever. A trust can be flexible and actually change how it is taxed over time. In fact, a good estate plan can control those changes to utilize different benefits at the most desirable time. Which type of trust is most beneficial is often determined by the dichotomic balance of taxes vs. control. 

    Grantor Trusts

    As you might expect, with a grantor trust, the income gets taxed to the grantor of the trust. This includes all revocable trusts and some irrevocable trusts if the grantor retains certain control over the trust assets such as a revisionary interest, the power to control beneficial enjoyment, the power to revest, the power to distribute income to the grantor or their spouse, and specific administrative powers for the grantor’s benefit.  While the initial reaction to reporting your trust’s income on your personal tax return may be aversive, consider first that the income tax brackets for trusts are hyper-compressed. While a single individual’s income in 2026 will get taxed at the highest rate of 37% at $640,600 ($768,700 for those married filing jointly), a trust’s income will be taxed at that same maximum rate at only $16,000. Simply put, the vast majority of people will pay a lower tax rate on the income than would the trust, which can quickly add up to thousands of dollars in tax savings.  This is pretty straightforward when it comes to the actual grantor of the trust. It gets more nuanced, however, when you plan for the beneficiaries after the grantor’s death. Even after the grantor passes away, a beneficiary can be treated as the owner, or “grantor,” of the trust for income tax purposes if the beneficiary has the sole power to vest the income or principal of the trust in him or herself. This is referred to as a beneficiary deemed owner trust (“BDOT”).  With a BDOT, the same tax benefit is present by allowing income to be taxed to the individual beneficiary rather than the trust. The tradeoff in the BDOT scenario, however, is potentially excessive control. Most grantors aren’t worried about themselves having full control over assets, but when it comes to their children or grandchildren, their estate plans may be set up specifically to protect those beneficiaries either from themselves or from others. If that is a concern, grantors may want to limit the beneficiary’s control over the assets by either having a neutral trustee with discretion as to making distributions or by simply limiting the beneficiary's own power to withdraw assets. In these cases, the grantor would have to choose between giving the tax benefits to the beneficiary or limiting their extensive control over the assets. 

    Simple Trusts

    Simple trusts are named as such because their administration is exceedingly… simple. There is no discretion whatsoever when it comes to distributions. All trust income MUST be distributed annually and NONE of the principal can be distributed until the termination of the trust. Additionally, no charitable contributions can be made from a simple trust. It doesn’t get much simpler than absolutes such as “all” and “none” when it comes to trust administration.  Because all of the income earned in any given year must be distributed to the beneficiaries that same year, the tax liability for the income also passes through to the beneficiaries. Once again, however, the tradeoff to the tax benefit is loss of control. Simple trusts are not flexible. What if you want to let income accumulate to increase growth? You can’t do that with a simple trust. What if a beneficiary needs an emergency distribution but the income is not enough to satisfy the need? You can’t tap into the principal to supplement the insufficient income. The definitive nature of simple trusts that makes them almost effortless to administer also makes them rigid and extremely limited in their application in an estate plan. 

    Complex Trusts

    Complex trusts are much less limited than their simple counterparts and offer greater flexibility. They provide options and allow for discretion rather than strict compliance to complete and unyielding instructions. If the trustee has the option to retain income and distribute principal, then it is a complex trust.  The flexibility of complex trusts allows for situation-specific administrative decisions that can change with the circumstances. When it comes to taxes, the same benefit vs. control balance applies, but the trustee can tip the scales in one direction or the other based on what is most beneficial for a particular beneficiary in any given year. The trustee can distribute all of the income and transfer tax liability to the beneficiary to minimize the taxes owed, or the trustee can hold on to the income, which would result in a higher tax bill being paid by the trust but would also allow the corpus of the trust to continue to grow and continue to keep it protected. Even complex trusts can have provisions that give the trustee some instruction and/or limitations to their decisions in these situations, but ultimately there is at least some level of discretion conceded to the trustee. 

    Conclusion

    Trust taxation is an important factor to consider when deciding what type of trust is right for you, and a good estate plan can utilize the different benefits of varying trusts at the appropriate time. The attorneys at Cavich can help you build an estate plan containing a trust that balances the tax savings vs. control scale to optimally carry out your wishes. ]]>         by Maxwell Trubiano <![CDATA[Estate Planning for Families with Minor Children: Planning Beyond the Basics]]> https://www.cavitch.com/?p=256923 2026-03-11T19:00:24Z 2026-03-11T19:00:24Z For parents of minor children, estate planning is about far more than simply signing a will. A major objective is to ensure that, if the unexpected happens, your children are cared for by the appropriate people and that the assets for their support are managed responsibly until such time that the children are mature enough to manage the assets by themselves. Most parents understand that a will allows them to nominate a guardian to raise any minor children, if necessary. Without that nomination, a court will decide who raises your children if both parents pass away. While courts do their best to honor family wishes, the absence of clear instructions can create uncertainty or even conflict among relatives during an already difficult time. One commonly overlooked issue is the management of the assets left to those children. If minor children inherit assets outright, the law typically requires a court-supervised guardianship of the estate until the child reaches age 18.  The guardianship process itself can also be more burdensome than families expect. A guardian of the estate must typically be formally appointed by the probate court, post a bond in certain circumstances, and comply with ongoing reporting requirements. This often includes preparing an inventory of the child’s assets, filing periodic accounts with the court, and seeking court approval for certain expenditures. While these safeguards are intended to protect the minor’s property, they can create administrative costs, delays, and public disclosure of financial information. In addition, the funds generally must be turned over to the child outright when they reach age 18, regardless of maturity or financial readiness. For many families, the idea of an 18-year-old suddenly receiving full control of significant assets is less than ideal. This is where thoughtful planning makes a difference. By incorporating trusts into an estate plan, parents can ensure that funds are managed by a trusted individual for the benefit of their children. The trustee can use those funds for a child’s health, education, maintenance and support while the children are growing up. This structure ensures prudent investment and distribution of the assets, while remaining private to avoid the costs and delays associated with formal guardianship. Eventually, or upon certain terms and conditions, control over the assets can be given directly to the children, where they would no longer have to work with the third-party trustee to receive distributions of their inheritance.  Trusts can also help families avoid unnecessary probate complications and provide continuity in financial management if a parent becomes incapacitated. Paired with properly executed powers of attorney and health care directives, these tools ensure that someone you trust can step in to manage finances and make medical decisions if needed. Estate planning for parents is ultimately about creating a framework that protects both your children and the assets intended for their benefit. With the right planning, you can provide stability, guidance, and financial protection—even if you are not there to do it yourself.  Contact the attorneys at [nap_names id="FIRM-NAME-2"] today to begin planning for your family's future.]]>