Take-Away: When a trust is created with specific tax objectives in mind, it is critical that the trust instrument be administered according to its express terms, especially when tax objectives motivated the trust’s creation. Unlike a game of horseshoes, getting ‘close’ is not enough when it comes to administering a trust with tax objectives. Background: […]

Take-Away: Michigan, along with most other states, has adopted the Uniform Probate Code. One of the controversial provisions of that Code is the ability to treat and admit as a Will or Codicil a document or writing that has NOT been executed in compliance with Will execution formalities Michigan Rule: The scope of this rule […]

Take-Away: The 2017 Tax Act overhauled the tax treatment of spousal support that is paid incident to a divorce or legal separation. Along with those changes in the taxation of a spousal support award is the repeal of the alimony trust which was equivalent to a legal exception to the grantor trust taxation rules. The […]

Take-Away: You have repeatedly heard from me that the best way to transfer an IRA is to move the funds from the ‘old’ IRA custodian directly to the ‘new’ IRA custodian, and skip the 60 day rollover. Every year the IRS reports on IRA owners who for some reason end up blowing the 60 days […]

Take-Away: A bipartisan sponsored Bill is currently working its way through Congress which would allow taxpayers age 65 and older to make transfers from their IRAs to fund charitable remainder trusts (CRT) and charitable gift annuities. Informal Title: The Legacy IRA Act, House Bill 1337 Background: Current law permits a taxpayer age 70 ½ or […]

Take-Away: By now we all know the dangers of transferring retirement assets using a 60-day rollover. Miss the deadline, and you are treated as receiving a taxable distribution, and if you are under age 59 ½, plan on paying another 10% excise tax as well due to that early IRA distribution. Over the years Treasury […]

Take-Away: After two trips to the Michigan Court of Appeals and one to the Michigan Supreme Court, we now have some guidance (I hope!) on a child or trust beneficiary’s legal standing to initiate litigation with regard to their parent’s revocable trust, whether or not the parent is then competent. This ‘clarification’ of the law […]

Take-Away: An in terrorem clause used in a trust, also known as a ‘no-contest’ clause,  is an effective way to prevent after-death challenges to the validity of the trust (or a Will.) But often creative efforts are taken by lawyers to discern how a probate court would react to a potential challenge to the trust […]

Take-Away:  When the settlor of the a revocable trust becomes mentally incapacitated,  the settlor’s lack of mental capacity alone will not cause the trust to automatically become irrevocable. Illogical as that sounds, it is the law in Michigan. Background: Other individuals beside the settlor may directly or indirectly hold the power to terminate a trust, such […]

Take-Away: Accounting income is not the same thing as taxable income. This becomes clear with reference to Section 409 of the Uniform Principal and Income Act (UPIA). Generally an irrevocable trust that receives a distribution from an IRA or other qualified retirement plan must classify 10% of that distribution as trust accounting income; the remaining […]