Take-Away: A second home, or vacation home, is an excellent asset to transfer to a spousal lifetime access trust (SLAT). A vacation home normally consumes income rather than generates income. In addition, often the vacation home is an heirloom type of family asset with plenty of memories held by children and grandchildren, which makes it […]

Caution: This summary is pretty technical, but important for ILIT trustees. Take-Away: Due to a recent change in the tax law, newly issued cash value life insurance policies will probably have higher premiums, but that might ultimately result in fewer life insurance policies lapsing prior to the insured’s death. This recent change also is yet […]

Take-Away: The federal Employee Retirement Income Security Act [ERISA] contains an extremely broad exemption provision that over-rides conflicting state laws. One exception to this principle that ERISA preempts conflicting state laws is a state’s slayer statute. Background: A forfeiture provision under a state’s probate laws is often called a slayer statute. Michigan’s version of a […]

Take-Away: Despite the SECURE Act’s 10-year distribution rule for inherited IRAs, the beneficiary of a decedent’s traditional IRA must take the decedent’ required minimum distribution (RMD) if it was not taken prior to the decedent’s death. That taxable distribution is not part of the SECURE Act’s 10-year distribution option for RMDs. Background: There is some […]

Take-Away: No one knows what tax reform will ultimately look like later this year, but that is not a good reason to ignore some planning steps that can be taken now to mitigate the increase in taxes that can be expected from that tax reform. All planning steps embrace the use-it-or-lose-it principle. Background: In March, […]

Take-Away: Roth IRA contributions and ‘backdoor’ Roth contributions can be made until May 17, 2021. Background: With the IRS’s recent extension in which to file 2020 Form 1040 income tax returns until May 17, 2021, that extension also pertains to Roth IRA contributions. Roth IRA Contributions: That means for those individuals who are under age […]

Take-Away: It is possible that a second reconciliation Bill could lead to a doubled capital gain tax for wealthy individuals, should Congress fail to embrace President Biden’s proposed increase in the corporate income tax rate from 21% to 28%. If that becomes a realistic outcome, then individuals who earn more than $1.0 million in income […]

Take-Away: While a recent IRS Publication on required minimum distribution (RMD) rules created major confusion, it also answered several lingering questions created by the SECURE Act. The IRS has informally admitted that for normal distributions to designated beneficaries, i.e. individuals, there is no requirement for an individual to take any distributions from an inherited retirement […]

Take-Away: When an IRA owner dies without naming a beneficiary, the  assets held in the IRA pass to the default beneficiary under the IRA custodial agreement, which is usually the deceased IRA owner’s estate. The IRS has issued several favorable private letter rulings this year that show how the decedent’s  IRA can be directly transferred […]

Take-Away: A self-settled special needs trust which preserves the beneficiary’s eligibility for Supplemental Security Income (SSI) generally cannot be terminated ‘early’ without jeopardizing the beneficiary’s SSI benefits and triggering a repayment of the previously received Medicaid benefits. A decanting of that special needs trust is viewed by the Social Security Administration (SSA) as a termination […]