Take-Away:  Since the 2017 Tax Act and its doubling of the applicable exemption amount to avoid transfer taxes, there has been less discussion with regard to the need to implement estate freeze strategies. That may change if the applicable exemption amount is reduced in the next couple of years and the interest rates used to […]

Take-Away: A sale of an appreciating asset to an irrevocable grantor trust can shift future appreciation of the asset out of the transferor’s taxable estate, but not consume any of the transferor’s federal transfer tax exemption. The sale of the appreciating asset is exchanged for a fixed, or frozen, promissory note. The sale to a […]

Take-Away: Yet another estate freeze strategy is a preferred partnership which provides the senior family member with a fixed stream of cash flow in the form of a preferred interest. This freeze strategy can be much more complicated than either a grantor retained annuity trust, or GRAT, or the sale of an appreciating asset to […]

Take-Away: Using self-directed IRA is often asking for trouble. Trouble not only in the form of prohibited transaction penalties but also in disqualifying the IRA, thus causing the entire IRA balance to be subject to immediate taxation. A recent Tax Court decision demonstrates the risks associated using a self-directed IRA, or perhaps more importantly, relying […]

Take-Away: While the SECURE Act made the 10-year payout for inherited IRAs of owners who died after 2019, there is still some confusion over the distribution rules if the IRA owner died prior to 2019 leaving their IRA to a see-through trust. Background: We know that that SECURE Act created the 10-year distribution rule for […]

Take-Away: The high federal income taxation of discretionary non-grantor trust’s accumulated income can be mitigated, to some extent, by directing discretionary distributions from the trust to a charity, a charitable remainder trust or to a qualified subchapter S trust where the trust beneficiary is also the beneficiary of that ‘other’ trust. Background: As has been […]

Take-Away: The exercise of a power of appointment is controlled by the instrument that creates the power of appointment. As a generalization, the residuary clause of the powerholder’s Will does not exercise the power of appointment. Background: It is generally said that a power of appointment is one of the most useful tools in estate […]

Take-Away: Some buy-sell and redemption agreements that attempt to establish a value or price for stock on the shareholder’s death may not be binding on the IRS for estate tax purposes. Background: A stock redemption agreement may control the value of stock for estate tax purposes. However, several conditions must be met before such an […]

Take-Away: If an IRA is made payable to the settlor’s revocable trust, the IRA may be available to satisfy the deceased settlor’s creditor claims or expenses of probate administration. Background: The Michigan Trust Code adopts two separate provisions to deal with using a revocable trust’s assets to pay the claims of the deceased settlor. MCL […]

Take-Away: A recent Tax Court decision demonstrates the risk posed with marital deduction gifts, followed by the gift of the recipient spouse, being classified as an indirect gift. Background: IRC 2511(a) provides that a gift tax will apply “whether the transfer of property is in trust or otherwise, whether the gift is direct or indirect, […]