Take-Away: A sophisticated planning technique is for a wealthy individual to fund an Irrevocable Life Insurance Trust (ILIT) taking back a ‘right to be repaid’ at a point far into the future. The present value of the right to be repaid is then included in the wealthy individual’s taxable estate, at a value far less […]

Take-Away: An income-only self-settled trust enables a settlor to qualify for Medicaid eligibility. The danger is that if the settlor retains other rights in and to the corpus, that then makes the trust’s assets ‘countable’ for Medicaid eligibility. In addition, giving the trustee  the ‘power to adjust’ under the Michigan Uniform Principal and Income Act […]

Take-Away: While a Roth IRA is normally viewed as being strictly used for retirement purposes, it can also act as a flexible backup account. Thus, a Roth IRA can serve a dual purpose of  accumulating funds for retirement, or act as a savings account when funds are needed long before retirement is reached. Background: We […]

Take-Away: For the uber-wealthy, there is a growing interest in private placement life insurance as a means to escape the possible ‘wealth tax’ triggered on an individual’s ‘income’  that some in Congress continue to propose as a means to generate more federal revenue. While somewhat technical, the features of private placement life insurance might be […]

Take-Away: The Kiddie Tax can often pose a tax-trap for parents, especially if their teens spend considerable time on their cellphones and computers quietly trading in digital currency. Background: The Kiddie Tax is part of the Tax Code. The Kiddie Tax is intended to discourage wealthier individuals from transferring assets to the child to take […]

Take-Away: Leaving retirement benefits to a disabled or chronically ill designated beneficiary can exploit stretch required minimum distributions. The challenge will be to meet the statutory definitions of disabled or chronically ill. Fortunately the SECURE Act gives us new tool to use, the Applicable Multi-Beneficiary Trust to direct retirement benefits to separate trust shares created […]

Take-Away: The problem with non-grantor trusts is the very high federal income tax imposed on the trust’s accumulated income. There are, though, some sophisticated planning strategies that can be used to mitigate and shift that income away from the trust and to other beneficiaries who will presumably be in a much lower marginal federal income […]

Take-Away: When moving retirement funds between IRAs or from qualified plans to IRAs, it is best, and safest, to move funds in a direct transfer or direct rollover, and skip the 60-day rollover option. Background: Basically, there are three different methods used to move retirement dollars. Two are pretty straightforward. The third is fraught with […]

Some interesting survey results were just released with regard to IRAs by the Investment Company Institute. ici.org/system/files/2022-07/ten-facts-iras.pdf (https://www.ici.org/system/files/2022-07/ten-facts-irs.pdf. At year-end 2021: the percentage  of all U.S. retirement accounts held in IRAs were 35%. the total assets held in IRAs (including traditional and Roth IRAs, SEP IRAs and SIMPLE IRAs) was $13.9 trillion. the percentage of […]

Take-Away: Multiple beneficiaries of an inherited IRA can allocate among themselves the decedent’s final required minimum distribution (RMD) if it was not taken before death by the account owner. Missing the decedent’s final RMD is not the problem it once was, due to a recent change in IRS policy. Background: Once an IRA owner turns […]