Missives

The term modern trust is without any single definition, despite it frequently appearing in the new and legal journals. Recently authors have attempted to identify the key characteristics of a modern trust.

Closely held family corporations are ripe for IRC 2036(b) claims as parents move their voting stock out of their taxable estates as part of a comprehensive estate plan. Even sales of voting stock are at risk if the IRS finds a deemed gift if the purchase price is too low.

These Proposed Regulations create a second set of rules that will have to be followed, along with a second election, if the goal is to attract the $1,000 pilot program contribution to a Trump Account. It is nice to see the broad period in which a ‘late’ election for a pilot contribution can be made to a Trump Account, but if one of the key reasons for the pilot contribution is to permit that contribution, along with other contributions to the Trump Account, to compound during the growth period of all Trump Accounts, waiting until the child is age 17 to only then make the pilot-election makes little sense.

Starting March 1, 2026, many residential real estate transactions will have to be reported by the realtor who handles the closing to FinCEN or face substantial civil and/or criminal penalties.

States use different factors to justify imposing income taxes on non-grantor trusts. As these trusts become more complex, it becomes a challenge to assess which states are justified in imposing its tax based on the trust’s nexus with the state.

The IRS extended the time for qualified plan sponsors to implement technical changes to their plans caused by the SECURE 2.0 Act, including the determination of an eligible designated beneficiary along with a few other highly technical rules.

Unlike the earlier court decisions that dealt with statutory formalities or the impact of the sponsor’s decisions on the value of the assets held in a DAF, Peterson seems to directly focus on the nature and legal effect of a DAF agreement that contains the donor/advisor’s retained advisory privileges.

Locating a dynastic non-grantor trust in a state that does not impose a state income tax can greatly help to avoid a tax drag on the accumulation of wealth.

One of the basic duties of a trustee is to keep trust beneficiaries reasonably informed. While there are limits to the character and volume of the information that the beneficiary may properly demand from the trustee, those limitations will be hard for a trustee to identify when the standard that is applied is reasonableness.

Obtaining a ‘free’ $1,000 contribution to a Trump Account cannot be overlooked as an enticement to open a Trump Account for a newborn. But if flexibility in access and investments, and the opportunity to avoid all taxation on earnings is an important motivation for a donor, then contributions to a 529 account is probably a much better long-term ‘investment’ that can be made on behalf of a child, since unlike a Trump Account, or a UTMA account, or a Minor’s Trust, the creator of the 529 account always remains in control of the account along with distributions from the 529 account, until the ‘excess’ 529 funds are later rolled into a Roth IRA for the child-beneficiary.