Take-Away: There is much discussion these days is over the planning technique of directing an IRA to be paid to a trust on the death of the IRA owner. The benefit of this strategy is to shelter the IRA from creditor claims against the individual beneficiary, which would not be protected if the IRA was […]

Take-Away: With some of the changes resulting from the 2017 Tax Act, there could be more use of limited liability companies (LLC) in estate plans. One change is that the federal alternative minimum tax is repealed for C corporations, which may cause some businesses to consider incorporation. With many taking a second look at incorporation, […]

Take-Away: Today the U.S. Supreme Court held that state statutes that automatically and retroactively revoke life insurance beneficiary designations of an ex- spouse after a divorce are constitutional. The decision in Sveen v. Melin  was 8 to 1.  The Court found that these state statutes do not violate the Contracts Clause of the U.S. Constitution. […]

Take-Away: In a widely anticipated court decision, the North Carolina Supreme Court decided last week that North Carolina could not tax an irrevocable Trust when the sole basis for imposing the income tax  was the North Carolina residence of one trust beneficiary. The Kimberly Rice Kaestner 1992 Family Trust v. North Carolina Department of Revenue, […]

Take-Away: For transfer tax purposes, the value of the transferred asset is normally determined on the date of the gift or transfer. However, that ‘date of transfer’ is not a fixed rule. Sometimes post-transfer events can affect the value of the transferred asset for transfer tax reporting purposes. Background: To determine the value of a […]

Take-Away: With the change in distribution rules caused by the SECURE Act, some creative ideas are being touted to circumvent the new 10-year payout rule, especially in light of the 2021 change in the Uniform Lifetime/Minimum Distribution Table. While worth considering, a trustee has to take many different variables into its decision to take taxable  IRA […]

Take-Away: Using a testamentary general power of appointment is a convenient way to add income tax basis to assets on the power holder’s death. There are risks, however, in ‘free-basing’ with a testamentary power of appointment. Background: We have covered this estate planning strategy in the past [actually a couple of years ago if you […]

Take-Away: The use of an IRA as collateral security for a loan could cause that IRA to become immediately taxed as income. A borrower needs to be careful when listing an IRA on the schedule of assets furnished to a lender. Background: The Tax Code generally forbids the use of any portion of an IRA […]

Take Away:  Month’s ago I reported on the Lerbakken Bankrutpcy Court decision where a debtor’s awarded interest in his former spouse’s retirement accounts was not protected in his subsequent bankruptcy proceeding. That decision was sustained by a federal appeals court earlier this month. Case: Lerbakken v. Sielfoff & Associates, 590 BR 895122, A.F.T.R. 2d 2018-6359 […]

Take-Away: Addiction is a reality in our society today. Parents and grandparents often turn to trusts to hold and administer an addicted family member’s inheritance. If a trustee is called upon to use trust assets to deal with a beneficiary’s addiction, then a trustee should require that certain provisions be included in the trust instrument, […]