Missives

The choice of a funding formula in a trust, often with a marital deduction trust funding formula can affect how the bequest is funded. Similarly, a trust funding formula can be used to fund a nonspousal trust, e.g., a credit shelter trust, or simply a pecuniary, i.e., dollar amount bequest, allocated to an individual.

As prospective donors weigh the pros and cons of contributing to a Trump Account or to a 529 qualified higher education account, they should factor in the potential cost, and hassle, of filing a federal gift tax return (Form 709) for their contribution to a Trump Account.

There are pros and cons when debating to contribute to a Trump Account, or a 529 account, or a Uniform Transfers to Minor’s Account. One such ‘con’ might be the level of required reporting that is associated with a Trump Account.

The initial trustee of a Trump account has been identified by Treasury, along with rules for when funds are rolled over to a successor trustee of a Trump account. The IRS has also released a draft of the Form for annual reporting for Trump accounts.

Ladybird deeds are highly effective to avoid probate of real estate on the owner’s death, but they can also expose the beneficiary to losses due to the lapse of insurance coverage.

When reporting income, beware of the claim of right doctrine that requires reporting the income in the year of its receipt when there are no apparent restrictions as to the income’s disposition, even if that income must later be repaid.

Not all wedding expenditures result in taxable gifts, but it will be important to structure and document large expenses correctly to allocate them to hosting costs and thus avoid being classified as an indirect gift.

A charitable lead annuity trust, or CLAT, is a powerful estate planning tool to exploit a charitable deduction and potentially pass future appreciation to heirs without any transfer tax cost.

A probate court can impose a constructive trust to restrain the use or transfer of assets as an equitable remedy to prevent unjust enrichment if the court believes that property is wrongfully obtained or held.

The intended purpose behind all of these uniform laws is to provide consistency and efficiency in the disposition of wealth in a highly mobile society.