Take-Away: Almost all distributions from a qualified plan or IRA are taxed as ordinary income, and thus most distributions are subject to relatively high federal income tax rates, e.g. 25% or 37% rates. One exception to the ordinary income taxation of a distribution from a qualified retirement plan account is when employer stock is distributed […]

Take-Away: Roth IRAs are becoming are bigger part of an individual’s estate. In order to maximize the tax benefits of a Roth IRA it is important to follow two primary deadlines that govern Roth IRAs as well as the ordering rules for how a Roth distribution is classified. Background: I have spent time the past […]

Take-Away: Normally the existence of a general power of appointment will cause the value of the assets that are subject to the exercise of that power of appointment to be included in the power holder’s taxable estate. That resulting estate inclusion can be both bad and good. It is bad because it exposes the power […]

Take-Away: An incapacitated retiree who had her IRA deposited to her bank account was taxed even though she never actually received them. Reported Decision: Nice v United States, (U.S. District Court, Eastern District of Louisiana) No. 18:7362 (October 16, 2019) Facts: Mary Ellen Nice (Mary) was the widow after 61 years of marriage. Her husband […]

Take-Away: A federal court will treat a revocable trust as a legal entity that is separate from its settlor. This was done in order to expose the trust’s assets to satisfy the trust’s (not the settlor’s) creditors under strange facts. Reported Decision: JPMorgan Chase Bank, N.A. v Larry J. Winget; Larry J. Winget Living Trust, […]

Take-Away: Preliminary data culled from tax returns suggest that the 2017 Tax Act has had a negative impact on charitable giving, as many predicted. Background: The 2017 Tax Act radically changed many income tax provisions that affect charitable giving. Some of these important changes (i) doubled the size of the standard income tax deduction for […]

Take-Away: A recent Michigan Court of Appeals decision effectively ‘punished’ a son who claimed that he was following his deceased father’s directions. The son made a gift when he testified that he was carrying out his father’s testamentary direction. From the fact, however, I am not sure we should feel sorry for the son. Case: […]

Take-Away: As a broad generalization, when a charitable trust is created, the belief is that only the Attorney General can bring a lawsuit to enforce that charitable trust. The Michigan Court of Appeals just held that the trustee of the decedent’s trust who distributed the assets to the university for charitable purposes could sue the […]

Take-Away: Some trust beneficiaries look at their trustee as their agent who is required to respond to the beneficiary’s directions. A federal appeals court in California recently disagreed that a trustee serves in an agency capacity with regard to the trust’s beneficiaries. Case: Banks v. Northern Trust Corp, 929 F.3d 1046 (2019) Issue: The facts […]

Take-Away: On September 15, 2019, the law changed with regard to the federal Thrift Savings Plan, which has over 5 million plan participants. The TSP Modernization Act of 2017 is supposed to provide much greater flexibility for participants to access their retirement savings account with more rights of withdrawal. Background:  The Thrift Saving Plan (TSP) […]