Take-Away: As was indicated a week or so ago, the proposed Treasury Regulations published on November 20 make it clear that the fear of ‘claw-back’ when calculating an individual’s estate taxes if an individual makes large lifetime gifts before 2026 is unwarranted. A couple of folks asked for a clearer definition of the ‘claw-back’ problem […]

Take-Away: New proposed Treasury Regulations may make it easier for a plan participant to take a hardship distribution from a qualified plan but only if the qualified plan permits hardship distributions to its participants. Background: A qualified plan may permit hardship distributions (withdrawals) by participants from their account balance. The Regulations specify that a hardship […]

Take-Aways:  Often we intentionally help clients plan to obtain an income tax basis ‘step-up’ of an appreciated asset on the death of a spouse now that federal estate tax minimization is less of a concern. As part of that basis planning: Consider the possibility of a qualified disclaimer by a surviving spouse in lieu of […]

Take-Away: The last increase in IRA contribution limits occurred in 2013. Larger retirement plan contribution limits will be permitted in 2019,  hopefully encouraging more individuals to save for retirement. Source: Treasury Notice 2018-83 IRAs: The contribution limit to an IRA for 2019 will increase from $5,500 a year to $6,000. If the taxpayer is over […]

Take-Away: The attempt to use a governing instrument like a Will or Trust to expressly allocate taxable income from a retirement plan or IRA account to a charity will be unsuccessful unless that allocation directive has an economic effect independent of the income tax consequences. Background: Sometimes a 401(k) account or a traditional IRA are […]

Take-Away: In response to new IRC 199A and its 20% income tax deduction for sole proprietorships and ‘pass-through’ entities, one planning strategy was for a business owner to transfer interests in an operating business into several non-grantor trusts, so that each trust could qualify for the IRC 199A deduction with regard to the income that […]

In Notice 2018-57 Treasury just announced the cost-of-living adjustment for transfer tax exemptions and the income tax standard deduction. Estate and gift tax exemption: $11,400,000 per person (up from $11.18 million) Gift tax annual exclusion: $15,000 per donee (same amount as in 2018) Income Tax Standard deduction: marrieds, filing-jointly: $24,400 (up from $24,000 for 2018) […]

Take-Away: On November 8 Treasury published its Priority Guidance Plan with regard to tax regulations and other estate and gift tax topics that will be addressed before June 30, 2019 that are of interest to trusts and their administration. Key Topics in the Priority Guidance Plan: Fiduciary Investment Advisory Fees: Top of the list will […]

Take-Away: Unlike ‘normal’ creditors who must first obtain a judgment before the debtor’s assets can be levied upon, the IRS possesses a statutory right to levy a taxpayer’s assets without first having to go to court. Background: A recent Michigan federal court decision provides a helpful reminder that the IRS is a unique ‘creditor’ which […]

Take-Away: Grantor trusts are popular estate planning devices these days. The trust’s income is taxed to the grantor, but the payment of the trust’s income tax liability by the grantor is not treated as a taxable gift. Similarly, since the trust is treated as the grantor’s alter ego, the sale of appreciated assets from the […]