Take-Away: A charitable lead trust is an effective estate planning tool to often used in a low-interest environment to shift wealth transfer tax-free. Background: A charitable lead trust (CLT) is an irrevocable trust which gives to the charity a ‘leading’ interest in the trust, either for a lifetime or a term of years. That ‘leading’ […]

Overview: Part I covered the four types of charitable lead trusts (CLTs) and suggested some of the reasons when a CLT might be used. Part 2 covers some of the detailed requirements of a CLT and  distinguishes the features of a charitable lead annuity trust (CLAT)  versus a charitable lead unitrust. (CLUT.) Common elements and […]

Background: A popular feature of many sophisticated trusts, to add flexibility to the trust to respond to future changes in the circumstances of trust beneficiaries, is to give a trust beneficiary a testamentary power of appointment over the trust assets, or a portion of the trust’s assets. The person to whom the testamentary power of […]

Take-Away: Much discussion took place in 2021 over the threat of the repeal of a basis step-up on the death of the asset’s owner. While that change in the tax law did not materialize in 2021, the debate on the merits of a step-up in basis is not going to go away anytime soon. Background: […]

Take-Away: Cryptocurrency can be purchased by an IRA, but it cannot be contributed to an IRA. Background: Cryptocurrency is not government issued legal tender. Rather, cryptocurrency is an asset class other than money. The IRS treats cryptocurrency as property, and not currency, so that cryptocurrency has an income tax basis for purposes of measuring gain […]

The applicable federal rates (AFRs) for April, 2022 are as follows: Short-term (less than 3 years): 1.26% (compared to 0.97% for March) Mid-term (3 years to 9 years):  1.87% (annual) 1.86% (semi-annual, quarterly or monthly) (compared to 1.74%  to 1.72% for March) Long-term (9 years or longer):  2.25% (annual or semi-annual), 2.24% (quarterly or monthly) […]

Take-Away: There are several tax benefits associated with the use of a grantor trust. One danger to stay away from, however, is establishing a ‘pattern, practice or routine’ where the trustee exercises its discretion to reimburse the settlor using the trust’s assets with regard to the settlor’s obligation to pay the income tax liability of […]

Take-Away: When a surviving spouse of a qualified terminable interest trust (QTIP) moves to another state, there is the risk that the new domicile state may impose a state estate tax on the QTIP trust’s assets. Background: A couple of years ago the U.S. Supreme Court had the opportunity to review the necessary connections a […]

Take-Away: While the Uniform Probate Code has a ‘substantial compliance’ exception to following the rigid rules with regard to a Will’s execution formalities, a court may not be as accommodating with regard to conditions that are attached to the testamentary gift that is from a trust. An interesting Court of Appeals decision echo’s this principle. […]

Take-Away: Naming a trust as an IRA beneficiary is complicated. It can also be very expensive when you consider that an irrevocable trust is at the highest marginal federal income tax bracket of 37% when the trust’s income, which includes IRA distributions to the trust, exceeds roughly $13,300 during the year. Background: As we know […]