Take-Away: The separate share rule is relatively simple provision under the Tax Code. However, the application of the separate share rule with regard to how it assigns taxable income (DNI) under an estate or trust is not so simple. The application of the rule can cause trust beneficiaries to be treated unequally. The separate share […]

Take-Away: Despite a broadly phrased spendthrift provision in a trust, there still can be narrow situations where a creditor may be able to access the beneficiary’s income interest in the spendthrift trust. Background: The Michigan Trust Code defines a spendthrift provision as a term of a trust that restrains either the voluntary or involuntary transfer […]

Take-Away: Michigan’s legislature is currently looking at the adoption of the Uniform Directed Trustee Act. If that Act is adopted, a directed trustee will only be held liable when the trustee follows the adviser’s directions if the trustee’s misconduct is willful. The directed trustee will not be held liable for negligence when it follows the […]

Take-Away: Many changes were made by the 2017 Tax Act (the Act) to real estate, both for individuals and for those who are engaged in real estate development. Some of the changes are well known, e.g. the ‘capped’ $10,000 SALT itemized income tax deduction, while other changes are less well known, such as restricting IRC […]

Take-Away: We now are in that time of the year where thoughts turn to making gifts as part of end-of-the-year tax planning. Yet often trusts are funded with incomplete gifts for federal gift tax reporting purposes. An incomplete gift is one of the salient features of an intentional non-grantor trust (ING-trust) that is designed to […]

Take-Away: A non-spouse beneficiary cannot use a 60-day rollover with regard to an inherited traditional IRA. Only a custodian-to-custodian transfer of the inherited IRA will work to avoid immediate income taxation of the inherited IRA. Background: One critically important distribution rule is that a non-spouse beneficiary cannot perform a 60-day rollover of an inherited IRA. […]

Take-Away: I previously reported on FINRA rule 2165 which was effective on February 5, 2018. In response to a follow-up question that I received, this rule does not mandate a report of suspected financial exploitation by the investment advisor. Background: In February of this year FINRA announced two new rules. Trusted Person: FINRA rule 4512 […]

Take-Away: Last week the IRS published proposed Regulations that would eliminate our concerns about claw-back, which is the fear that gifts made before 2026 which were protected by the donor’s large lifetime gift tax exemption amount, would be ‘clawed-back’ into the donor’s taxable estate at death, causing those previous gift-tax-exempt transfers to be taxed at […]

Take-Away: If an irrevocable trust is not operated as a separate legal entity, and the settlor retains extraordinary control over the trust and the income the trust generates, the trust may be ignored for income tax reporting purposes with the result that the trust’s income is attributable to the settlor of the trust. Case: Full-Circle […]

Take-Away: When dealing with lifetime gifts during this period of the temporary increase in an individual’s basic exclusion amount (BEA) it is important to keep in mind that there exists a priority with regard to what tax exemptions are used to shelter lifetime gifts. That priority is: (i) deceased spouse’s unused exemption amount (DSUEA); (ii) […]