Take-Away: When you review a proposed discretionary trust, there are several key provisions or definitions to look for when you conduct that review to avoid second-guessing the settlor’s intent. A trust’s discretionary distribution provision should give clear guidance to the trustee when asked to make a distribution, while at the same time clearly identify the […]

The following is the short ‘checklist’ that I mentioned this morning, to be used when reviewing a trust instrument that contains a ‘trust director’ (formerly a ‘trust protector.’) Key Phrase Used?:The language used in the Michigan Directed Trust Act is “the trustee is subject to a power of direction.“We should make sure that this phrase […]

Take-Away: Retirement planning guru Natalie Choate recently wrote an article that attempted to shed some light on a favorable 2016 private letter ruling from the IRS with regard to identifying the oldest beneficiary of an accumulation see-through trust to which an IRA was made payable. The IRS’s conclusion was favorable because it seemed to ignore […]

Take-Away: An exception to the 10% penalty when a distribution is taken from an IRA before attaining age 59 1/2 is when the IRA owner is disabled. But being ill is not the same thing as being disabled. Background: Normally a distribution from an IRA prior to attaining age 59 1/2 will result in a 10% […]

Take-Away: The settlor of a lifetime QTIP trust can become the beneficiary of the QTIP marital trust on the death of the settlor’s spouse and continue to protect the trust’s assets from creditors, even though that trust could easily be classified as a self-settled trust and otherwise exposed to satisfy the settlor’s creditor claims at […]

Take-Away: An IRA that names a trust as its beneficiary results in several, often negative, mandatory distribution rules. The trust must qualify as a ‘see-through’ trust in order to use the oldest trust beneficiary’s life expectancy to calculate required minimum distributions (RMDs), and the IRA normally cannot be rolled over to continue to delay taking […]

Take-Away: Another court decision was recently reported that found the divorce of an insured revoked the designation of a former spouse as primary beneficiary of a life insurance policy. The Alabama Supreme Court found that this was the case even though the state’s revocation-on-divorce statute was passed after the life insurance policy and beneficiary designation […]

Take-Away: The 2017 Tax Act made a fundamental change in the income tax laws, effective January 1, 2019. It provides that there is no longer an income tax deduction for the payer of alimony or spousal support. As such, payments of alimony for judgments entered after that date will no longer be treated as taxable […]

Take-Away: While we are all familiar with the income tax benefits of a qualified charitable distribution from a traditional IRA, less clear is the implication of the IRA that holds non-deductible contributions. The after-tax portion of the IRA will not be treated as a qualified charitable distribution from the IRA. Background: A qualified charitable distribution […]

Take-Away: As we begin to digest the new SECURE Act and its various provisions, some of its new rules become clearer. What follows is digging a bit deeper into those new rules. IRA Contributions Beyond age 70 ½: Beginning in 2020 there is no prohibition on the amount an individual can contribute to an IRA, […]