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DEAR TRUST OFFICER: What is the maximum Social Security benefit these days? Do you think it’s sustainable?—LOOKING AHEAD
DEAR LOOKING: According to the Social Security Administration, an individual who earned more than the maximum taxable earnings consistently since entering the workforce at age 22 would be entitled to a monthly benefit of $5,181 if they retired at age 70 or later in 2026. That’s $62,172 per year, and it will be increased for future inflation. For those with maximum lifetime earnings retiring at age 67 the monthly benefit would be $4,207, and the early retirees (age 62) would get $2,969. The data may be found at https://www.ssa.gov/oact/COLA/examplemax.html.
Keep in mind that these numbers do not reflect deductions for Medicare premiums. The average retirement benefit in January 2026 was $2,074.53.
The Committee for a Responsible Budget believes that these maximum benefit levels are not sustainable. They have proposed a benefit cap of $100,000 per household, and an individual cap of $50,000 for benefits claimed at full retirement age (67) or a $62,000 cap for those who defer to age 70. The limits would not be inflation adjusted for 20 or 30 years, so that over time more and more retirees would be subject to them. At the moment, couples with two earners would be most likely to be affected, an estimated 0.05% of retirees. The plan has been estimated to reduce the actuarial deficit in the Social Security trust funds by about 20%.
However, Congress has not yet shown much interest in changing the taxes or benefits for Social Security.
Article ©2026 M.A. Co. All rights reserved. Used with permission.
Decedent’s estate was small enough that no federal estate tax return was required. He therefore did have unused federal estate tax exemption amounts, and these are portable to the surviving spouse upon making the election on an estate tax return. For “various reasons” no estate tax return was filed at the time. Now the surviving spouse would like to have that additional protection from federal transfer taxes, so a request for an extension of time to file the return has been made. The answer to the request is made via a private letter ruling. Recently two such rulings were published, Private Letter Ruling 202609001 and Private Letter Ruling 202609006.
In both cases the IRS granted the request. Because the estates were so small, and no estate tax return was required by law, the Service has greater administrative flexibility in such a situation. The contents of the affidavits and representations submitted to the IRS explaining the tardiness were not revealed in the ruling, nor was it revealed just how tardy the request was, but each was held sufficient to meet the requirements of the IRS Regulations. Accordingly, the estates were given another 120 days to file the return.
Given the steady expansion of the amount exempt from federal estate and gift tax, the tax is now likely to affect less than 1% of estates, so why are there so many requests for extensions to claim the Deceased Spousal Unused Exemption? One possibility is that the strong stock market returns in recent years has lifted the value of surviving spouses’ estates into the taxable area. Another is that some taxpayers and estate planners may fear that a future Congress will reduce the exempt amount—a number of Congressmen have advocated for exactly that policy. Claiming the unused exemption may be a hedge against future tax increases.
Article ©2026 M.A. Co. All rights reserved. Used with permission.
Richard Spizzirri had been married and divorced three times before he married his fourth wife, Holly Leuders. Naturally, they executed a prenuptial agreement, given that Richard was then worth between $24.7 million and $27.7 million, while Holly brought $1 million to the marriage. During their 18-year marriage, the prenup was amended five times. The key change was that Holly released earlier promises of a share of Richard’s estate for his commitment to provide $6 million in his will for her and $1 million for each of her three children from a prior marriage.
The couple became estranged, and Richard fathered two children outside of marriage, in addition to the four he had with his first wife. His will largely left his estate to the four children from his first marriage. In three codicils he added provisions for his sons conceived out of wedlock. He never amended his will as promised, and left nothing at all to his stepchildren.
The stepchildren sued for their inheritance, and Richard’s estate paid them, and then tried to make lemonade from that lemon by claiming those payments as an expense of administration. IRS objected, and the Tax Court agreed that the payments are not deductible.
On appeal, the 11th Circuit Court affirmed the Tax Court’s judgment. Treasury Regulations list five factors that suggest a transfer was contracted bona fide. First, the transaction underlying the claim occurs in the ordinary course of business, and is free from donative intent. Second, the claim is not related to an expectation or claim of inheritance. Third, the claim originates pursuant to an agreement between the decedent and the family member. Fourth, performance by the claimant stems from an agreement between the decedent and the family member. Finally, all amounts paid in satisfaction or settlement of a claim or expense are reported by each party for Federal income and employment tax purposes in a manner that is consistent with the reported nature of the claim or expense, that is, the deducted expense is reported as income by the recipient. None of these tests were met, according to the appellate court. Notably, the stepchildren did not report their inheritances as income [Estate of Spizzirri v.Commissioner, 136 F.4th 1336 (11th Cir. 2025)].
Article ©2026 M.A. Co. All rights reserved. Used with permission.
The IRS has reported that as of March 31 more than 4 million taxpayers have signed up for tax-favored Trump Accounts [IR-2026-42]. More than 1 million are covered by elections for the $1,000 pilot program contribution from the federal government. Form 4547 is used to create the account, available at the IRS website [https://www.irs.gov/pub/irs-pdf/f4547.pdf].
A Trump Account is a new version of an Individual Retirement Account (IRA) specifically for kids that does not require earned income for contributions. Up to $5,000 may be contributed each year through age 17, and at age 18 the account becomes a traditional IRA, subject to traditional IRA limits on withdrawals. As such, the account is of limited utility in meeting college education costs, it is primarily oriented toward retirement.
Financial planners have come up with an interesting twist. After the Trump Account becomes a traditional IRA, the beneficiary could convert it to a Roth IRA. The conversion amount would be taxable income, but if this happens early in the beneficiary’s career, perhaps spread over several years, the income tax hit would be relatively slight. The Roth IRA would then grow tax free until retirement, when it could provide for tax-free withdrawals free of the Required Minimum Distributions (RMDs) that apply to traditional IRAs. According to an illustration in The Wall Street Journal, assuming a modest 7% annual growth rate and assuming that the income tax on the conversion to a Roth IRA is paid from other sources, the Trump Account will be worth just over $3 million when the beneficiary reaches age 59½. Of course, that day is very far in the future, and the tax rules might change in the meantime.
Contributions to the Trump Accounts may begin on July 4, 2026.
Article ©2026 M.A. Co. All rights reserved. Used with permission.
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