Take-Away: A bipartisan sponsored Bill is currently working its way through Congress which would allow taxpayers age 65 and older to make transfers from their IRAs to fund charitable remainder trusts (CRT) and charitable gift annuities. Informal Title: The Legacy IRA Act, House Bill 1337 Background: Current law permits a taxpayer age 70 ½ or […]

Take-Away: By now we all know the dangers of transferring retirement assets using a 60-day rollover. Miss the deadline, and you are treated as receiving a taxable distribution, and if you are under age 59 ½, plan on paying another 10% excise tax as well due to that early IRA distribution. Over the years Treasury […]

Take-Away: After two trips to the Michigan Court of Appeals and one to the Michigan Supreme Court, we now have some guidance (I hope!) on a child or trust beneficiary’s legal standing to initiate litigation with regard to their parent’s revocable trust, whether or not the parent is then competent. This ‘clarification’ of the law […]

Take-Away: An in terrorem clause used in a trust, also known as a ‘no-contest’ clause,  is an effective way to prevent after-death challenges to the validity of the trust (or a Will.) But often creative efforts are taken by lawyers to discern how a probate court would react to a potential challenge to the trust […]

Take-Away:  When the settlor of the a revocable trust becomes mentally incapacitated,  the settlor’s lack of mental capacity alone will not cause the trust to automatically become irrevocable. Illogical as that sounds, it is the law in Michigan. Background: Other individuals beside the settlor may directly or indirectly hold the power to terminate a trust, such […]

Take-Away: Accounting income is not the same thing as taxable income. This becomes clear with reference to Section 409 of the Uniform Principal and Income Act (UPIA). Generally an irrevocable trust that receives a distribution from an IRA or other qualified retirement plan must classify 10% of that distribution as trust accounting income; the remaining […]

Take-Away: The proposed Regulations for IRC 199A confirm that real estate or equipment leasing activities can qualify for the 20% federal income tax deduction under IRC 199A as a separate trade or business. The Regulations apply the IRC 162 definition of a trade or business for non-commonly controlled rental activities. Following IRC 162 definitions can, […]

Take-Away: As noted previously, the IRS has provided guidance under IRC 643(f) with new proposed Regulations, declaring that it will aggregate several trusts for the purpose of identifying the reported taxable income from multiple trusts. This ‘aggregation’ approach is intended to have the effect of disqualifying  trusts with common beneficiaries that hold a trade or […]

Take-Away: The IRC 199A 20% income tax deduction is not available for high wage earners based on whether their business entity engages in certain service activities, referred to as Specified Service Trade or Businesses as identified in the proposed IRC 199A Regulations. The eligibility for the income tax deduction is also based on the amount […]

Take-Away: The 2017 Tax Act eliminated the ability to recharacterize a converted Roth IRA back into a regular IRA, effective January 1, 2018. However, Roth IRA conversions done in 2017 can still be recharacterized ‘back’ to a traditional IRA if that recharacterization occurs before October 15, 2018. Since a Roth IRA recharacterization takes time to […]