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 […]

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 […]

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 […]

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 […]

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 […]