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, […]

Take-Away: The IRS a year ago issued Final Regulations, effective October 18, 2020,  which confirm that income tax deductions allowed for some costs that are incurred in the administration of a trust or an estate will continue to be tax deductible, notwithstanding the suspension of miscellaneous itemized deductions under the 2017 Tax Act. The Final […]

Take-Away: With the ‘trimmed down’ $1.75 trillion Build Back Better Framework proposed legislation, some of the earlier tax law changes have disappeared, to be replaced by new proposals. (Did I just written a ‘trimmed down’ $1.75 trillion?) Background:  On October 29, 2021, the President announced a $1.75 trillion Build Back Better Framework Act. In order to […]

Take-Away: On November 3, the House Committee added back new tax proposals to the proposed Build Back Better Act that it had removed from the bill in the prior week. Overview: What is going on in Congress the past few weeks reminds me of what I used to do as a teenager, meaning something that […]

Take-Away: A surviving spouse as a designated beneficiary of a deceased spouse’s IRA has some options with regard to taking distributions from the inherited IRA, options that are not available to other non-spousal beneficiaries of inherited IRAs. Background: I received a couple of inquiries in the past few weeks confirming the basic the options that […]

Take-Away: With the compressed income tax brackets faced by non-grantor trusts, along with the possible imposition of additional income tax surcharges of 5% and 3%, more irrevocable non-grantor  trust should be drafted to include the authority of the trustee to make charitable distributions. Background: For years now we have come to deal with the high […]