Final IRC 199A Regulations Part III – Rental Real Properties

Take-Away: The Final IRC 199A Regulations, and IRS Notice 2019-7 seem to create a safe harbor that permits owners of rental real estate to qualify for the IRC 199A income tax deduction. As a generalization, ‘triple-net’ leased real estate will be excluded from the IRC 199A income tax deduction. The rental real estate owner will […]

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Beneficial Interests Vulnerable in Divorce

Take-Away: A beneficiary’s interest in an irrevocable trust should be protected in the trust beneficiary’s divorce, as most beneficial interests arise as a result of a gift or inheritance, which under Michigan law are presumed to be the beneficiary’s separate property. But divorce judges possess equitable powers to reach a fair division of assets, and […]

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Intellectual Property Assets

Take-Away: Most intellectual property assets can be transferred by a Will or a Trust. But some intellectual property rights have specific statutory durations, while others have an indefinite ‘self-life’ if properly used or registered. The key point is to make sure that these unique assets, with their intrinsic values, are clearly addressed in the Will […]

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Qualified Charitable Distributions – Expect a Surge

Take-Away: As we begin the annual chore of completing our income tax returns for 2018, many will be surprised with regard to the impact of the 2017 Tax Act on their federal income tax liability for 2018. While an individual’s standard deduction was essentially doubled, ($24,400 in 2019 for a married couple) their personal exemption […]

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Portability: The ‘Use It or Lose It’ Doctrine

Take-Away: If a spouse dies without using his/her unified transfer tax exemption, that exemption can be ported and used by the surviving spouse to shelter either lifetime gifts by the survivor, or applied to shelter federal estate taxes on the surviving spouse’s death. But if the deceased spouse’s ported  transfer tax exemption is not used to shelter […]

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Spousal Lifetime Access Trusts

Take-Away: The Michigan Probate and Estate Planning Council is currently looking at an amendment to the Michigan Trust Code that would address the legal consequences of a trust beneficiary who exercises a power of appointment to include the trust settlor as a potential beneficiary of the trust that he/she created. This change, if adopted, would […]

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Life Insurance – New Transfer for Value Reporting

Take-Away: The IRS recently published proposed new Regulations with regard to reporting obligations with regard to the sale of a life insurance contract which are intended to define how much of a life insurance death benefit is to be reported as taxable income. Background: One complicated area of the Tax Code is with regard to […]

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Administering a Non-Grantor Trust

Take-Away: There is a lot of talk these days about using non-grantor (irrevocable) trusts in response to the 2017 Tax Act, either to create multiple (trust) taxpayers that each can exploit the $10,000 annual SALT deduction, or to fragment and report business income which then enables each trust to claim the IRC 199A qualified business […]

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Discretionary Trusts: What to Look For

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 […]

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Trust Directors

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 […]

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