Take-Away: As a generalization, IRAs are exempt when the IRA owner files for bankruptcy. In the past, we have noted an exception when the IRA was acquired by the debtor through a divorce settlement, where it was the former spouse, not the debtor, who had made the contributions to the IRA. As indicated in a […]

Take-Away: Courts and trustees are often called upon to construe the terms of a trust instrument to carry out the settlor’s intent. Many of the rules of construction that generally apply to Wills are, after the adoption of the Michigan Trust Code, also applicable to interpret the terms of a trust instrument. Background: The Michigan […]

Take-Away: Gift tax traps lurk when trust instruments are modified, or trust assets are decanted, and the beneficiary’s waiver and/or consent is solicited to the proposed trust modification or administrative act. There could be occasions when the trustee should not ask for the beneficiary’s formal consent to a proposed modification or decanting. Background: A trust […]

Take-Away: While the popular press is filled with reasons to use an irrevocable non-grantor trust to work-around the limits imposed by the 2017 Tax Act with regard to itemized deductions you need to keep in mind that an irrevocable non-grantor trust is taxed much differently than an individual. Background: An irrevocable trust that is not […]

Take-Away: US citizens often acquire residential real estate in Canada and Mexico, either as winter vacation homes or summer hunting and fishing cabins. It is a mistake to assume that the normal rules with regard to real estate held in a trust that we follow in the U.S. will apply when real estate is acquired […]

Take-Away: A large part of Michigan’s recent Directed and Divided Trust Act is based upon the Uniform Directed Trust Act, which, in turn, was created with specific reference to the Uniform Power of Appointment Act. There was a subtle shift in creditor rights under the Uniform Power of Appointment Act that might work its way […]

Take-Away: I learned this past week that part of an Omnibus EPIC Amendment Bill that is floating around the Legislature in Lansing is a provision that would authorize secret trusts. It is not clear if this proposed addition that authorizes secret trusts will ever be adopted by the Michigan Legislature. In the past when the […]

Take-Away: The House of Representatives passed its version of the SECURE Act last week [H.R. 1994.] The Legislation now moves to the Senate for review and probable modification. A couple of big changes will come with the SECURE Act, if it becomes law. While some of the changes are minor ‘tweaks’ that are designed to […]

Take-Away: Michigan now recognizes self-settled asset protection trust with its adoption of the Qualified Dispositions in Trust Act. As a bit of a surprise is the fact that other trusts can be treated by courts as self-settled, which can be a bad thing when there are creditors looking for assets to seize in satisfaction of […]

Take-Away: A trustee can own and control an IRC 529 account. However, it is possible that the terms of the trust instrument might impose limits on the amount of control that the trustee can exercise over the IRC 529 account. Case: Alberhasky v. Alberhasky, Iowa Court of Appeals, No. 18-0927 (May 15, 2019) Facts:  Hard […]