Take-Away: Earlier today a summary was provided of some of the key provisions that are part of the SECURE Act 2.0 that was passed by the House of Representatives this week. [HR 2954.] A few more changes in have surfaced as I leaf through the legislation, summaries of which follow: IRA Prohibited Transactions Less Onerous: […]

Take-Away: On March 25, 2022, the House passed HR 2954, the so-called SECURE Act 2.0. This bill proposes many additional changes to existing rules that are intended to encourage retirement savings. The bill also purports to simplify and clarify retirement plan requirements (ha!) A summary of some of the changes in HR 2954 follow. Required […]

Take-Away: If a trust instrument is drafted that gives a trust protector extraordinary powers, such as the power to consent to the trustee’s exercise of discretion, it is critical that the same trust instrument include an alternate dispute mechanism in order to avoid an impasse between the two fiduciaries. Otherwise, there will probably be a […]

Take-Away: The Tax Code is a bewildering set of contribution rules and limits that pertain to employer sponsored 401(k), 403(b) and 457(b) retirement plans. The danger exists when assuming that the ‘rules’ that apply to one type of retirement plan apply to the other retirement plans. Background: We are all familiar with an employee’s contribution […]

Take-Away: With the emphasis on lifetime gifts to exploit the federal gift tax annual exclusion (now $16,000 per donee) and the temporary large applicable exclusion amount (through 2025), the question can arise if those lifetime gifts by a donor are an advancement of the donee’s inheritance on the donor’s death. The common law concept of […]

Take-Away: The Michigan Court of Appeals had a recent opportunity to reverse a probate judge’s decision to terminate a trust, since the termination would frustrate the settlor’s intent and the court order failed to follow the statutory notice procedure. Background: The Michigan Trust Code contains a couple of provisions where a probate judge can terminate […]

Take-Away: A trust and agency are both legal concepts about relationships. Because of this commonality in the relationships, the two concepts are often confused by the public. However, they are legally quite different. A trustee is not an agent of the beneficiary. Nor is the trust beneficiary an agent for the trustee. The trustee owes […]

Take-Away: In most cases, the time in which the IRS has to audit an income tax return will be either three or six years. However, in some cases, even though the income tax return was timely filed, the statute of limitations may never run with regard to a future IRS audit. Background: As a general […]

Take-Away: The proposed surtaxes on non-grantor trust income in the Build Back Better Act poses a real hardship on irrevocable trustees and trust beneficiaries while possibly also frustrating the settlors purpose for the Trust. Background: The proposed Build Back Better Act, passed by the House of Representatives and now pending before the Senate, includes an […]

Take-Away:  The pro-rata rule, which provides for the taxation of part of a distribution from a traditional IRA which contains both pre-tax and after-tax contributions, can be circumvented in only three ways, when the goal is to isolate basis (after-tax contributions) in the traditional IRA, which can then be converted to a Roth IRA. Background: […]