Take-Away: Estate plans these days’ focus on obtaining an income tax basis ‘step-up’ on the death of the owner of appreciated assets to avoid capital gain recognition by heirs and trust beneficiaries. While an income tax basis adjustment occurs on the death of the owner, there are two notable exceptions to the income tax basis […]

Take-Away: Like many other states, Michigan adopted the Uniform Probate Code in large part, and in particular its model provision that provides for the automatic revocation of a divorced spouse’s beneficial interest under a deceased former spouse’s ‘governing instrument.’ That automatic revocation includes not only the former spouse, but any provisions that are made for […]

Take-Away: A few months ago a Bankruptcy Court decision was brought to your attention where a former spouse who received part of his wife’s IRA as a result of their divorce settlement, divided pursuant to IRC 408(d), lost that IRA in a subsequent bankruptcy proceeding, where the debtor’s post-divorce IRA was not treated as an […]

Take-Away: More and more trusts are drafted with the addition of a trust protector provision. While the use of a trust protector helps to adapt the trust instrument to future changes in circumstances and thus it adds considerable flexibility to the trust’s administration, more thought needs to be given to the powers conferred on the […]

Take-Away: In the flurry of last-minute legislation signed into law by Governor Snyder, two Bills became law that are of interest to those who deal with trusts. Trust Certificates [PA 492]: This new statute was put in place to deal with the use of a Trust Certificate in lieu of recording the entire trust instrument […]

Take-Away: It is common to find in discretionary trusts use of the historic ascertainable standard “health, education, maintenance, and support.” This phrase finds its origins in the Tax Code, yet even the Tax Code’s Regulations do not attempt to define the term health. The concept of health may be a bit more elastic than originally […]

Take-Away: Former Governor Snyder signed into law what is informally called the Michigan Divided Trustee Act, the (Uniform)Directed Trust Act, and replaced the term trust protector with a new term, trust director. Many of the changes are now part of the Michigan Trust Code, located at MCL 700.7704B. Three separate House Bills [6129, 6130, and […]

Take-Away: A variable annuity is an investment tool that is sometimes used to defer income recognition with regard to grow wealth, but it carries some unique income tax ‘attributes’ [that’s putting it mildly] that often make it an unattractive investment strategy. If an individual is considering the the purchase of a variable annuity, he/she might […]

Take-Away: While the 2017 Tax Act liberalized the use of IRC 529 Higher Education Accounts to permit distributions to pay for tuition for elementary and secondary schools, up to $10,000 a year, not all states have jumped on that bandwagon. Background: An IRC 529 account is an investment account that is created by a donor […]

Take-Away: Michigan adopted, with a couple of modifications, the Uniform Directed Trust Act. It displaces the former Michigan trust protector provision, replacing it with a new section of the Michigan Trust Code. The Act permits a third party, also a fiduciary, to direct or otherwise control certain conduct of the trustee. The key point is […]