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, […]

Take-Away: As mentioned in the past, the Michigan Legislature is currently looking closely at several different proposed Bills that are intended to address and curb in some manner rampant elder abuse. Many of the proposed Bills would specify criminal behavior with respect to an elder’s health and welfare and the abuse/misuse of an elder’s finances. […]

Take-Away: As we have covered in the past, Michigan is a common-law jurisdiction. Married individuals are permitted to own and control their own separate property. We also know that married couples who move from one of the handful of community property states to Michigan can agree to have the property that they bring with them […]

Take-Away: With most of the SECURE Act provisions becoming effective in 2020, existing estate plans and retirement plan and IRA beneficiary designation forms will need to be reviewed, particularly those estate plans that feature large IRA and 401(k) accounts. A few practical observations follow. Acceleration of Taxable Income: Perhaps the biggest problem, by far, is […]