Take-Away: The IRS’s rollover rules are highly complicated. Often there is confusion when an amount is rolled over at the end of a calendar year. It is important to remember that the one-rollover per year rule is a 365-day rule, not a calendar year rule. Background: Often there is confusion when an IRA owner rolls […]

Take-Away: Many unsuspecting individuals serve as trustees of an irrevocable life insurance trust (ILIT.) Most of those individuals are clueless as to the fiduciary responsibilities associated with that role and their corresponding exposure to personal liability. ILIT Trustees: If an individual agrees, often as an accommodation to a family member or friend, to serve as […]

Take-Away: In the past the income and estate tax benefits of a grantor trust have been covered. Also previously covered is the fact that most spousal lifetime access trusts (SLATs) are grantor trusts. It is possible to structure a SLAT to not be a grantor trust, but that classification can be toggled on-and-off in how […]

Take-Away: The SECURE Act’s new 10-year distribution requirement requires present value calculations to determine whether it is best to defer taking any distributions from an inherited IRA until the tenth year, or to take distributions each year from the inherited IRA, or in some other pattern. Background: The Tax Code essentially provides two different situations […]

Take-Away: While grantor trusts are popular in estate planning from a gift, estate, and GST perspective, non-grantor trusts are gaining popularity for a variety of income tax reasons. If the income tax rules are changed by Congress, the use of non-grantor trusts will gain even more attention, along with the possible use of multiple non-grantor […]

Take-Away: An inherited IRA cannot be rolled over to another inherited IRA. Background: We are accustomed to individuals making a 60-day rollover of their IRA to another IRA. [IRC 408(d)(3).] We normally caution those individuals against such a move since mistakes can lead to missing the 60-day deadline, in turn leading to a taxable distribution […]

Take-Away: As we learn more about the prospect of certain tax law changes, such as the dramatic curtailment of annual exclusion gifts and its inevitable impact on irrevocable life insurance trusts (ILITs), third-party premium financing arrangements through loans may become a more efficient way to maintain life insurance policies held in ILITs, providing liquidity to […]

Take-Away: The income tax deduction afforded to estates and trusts to escape the compressed income tax brackets these entities face is governed by the concept of distributable net income (DNI.) The estate or trust cannot claim this income tax deduction for more than the DNI that is available to the entity. Normally, capital gains are […]

Take-Away: It has been 18 months since the SECURE Act became law, but we still do not have any Regulations to provide official guidance as to what ithe Act means in many situations. There seems to be no master strategy to overcome the SECURE Act’s elimination of the stretch IRA, or what trust works best for […]

Take-Away: For those IRA owner who want to use a trust to protect their beneficiary’s inheritance from the beneficiary’s imprudence or the beneficiary’s creditor claims, and also avoid having to follow the SECURE Act’s mandatory 10-year liquidation rule, naming a charitable remainder trust (CRT) for that beneficiary may be a viable option to consider. Background: […]