Missives

Any individual who claims a charitable deduction must comply with all of the reporting and disclosure requirements. Proper documentation is more than just a recommendation; it is a requirement. While the Tax Court’s decision acknowledged that it believed that the Besaws had made the charitable donations, it nonetheless disallowed their entire deduction due to the incomplete charity receipts. The Regulations must be followed as much as the statutes that authorize charitable deductions. Even undisputed charitable giving provides not tax benefit without meticulous documentation, and despite the best efforts of the donor to be transparent with the IRS.

Naming an estate as the beneficiary of an IRA is probably a mistake, because there are potentially two different distribution periods that might apply, which in turn can cause confusion that then leads to a 25% excise tax for the failure to take a required minimum distribution (RMD.)

Estate planning will now be about maximizing what beneficiaries actually receive after all taxes, whether those taxes are estate, GST,  inheritance, income, or capital gains.

With the One Big Beautiful Bill Act (OB3) far more attention will be given to positioning assets to obtain an income tax basis adjustment on a decedent’s death, more so than shifting asset appreciation out of an owner’s estate with lifetime gifts to avoid federal estate taxes.

Adding a charity as a discretionary beneficiary of trust income is a simple advance planning strategy that can be used to minimize the trust’s exposure to high, confiscatory, federal income tax brackets.

A debate currently rages among commentators whether estates and non-grantor trusts are subject to the new 2/37th limitation on itemized deductions starting in 2026.

This Delaware decision is an important reminder to settlors who are potentially considering the adoption of a self-settled asset protection trust, but reluctant to do so due to the loss of control over the transferred assets. A fair amount of control can still be retained over the trust while still enjoying the trust’s protection from creditor claims.

A silent trust will prevent the trust beneficiary from making a qualified disclaimer for transfer tax purposes.

As we begin to plan for 2026, perhaps the first thing we need to look at will be the expected changes to the retirement plan contribution rules for 2026.

While the One Big Beautiful Bill Act (OB3) just expanded the IRC 199A deduction to more owners of closely held pass-through businesses, there are still some limitations to that qualified business income deduction (QBI) that are not readily apparent.