Take-Away: Unlike other designated beneficiaries, a surviving spouse has a couple of options as to the source from which to take the deceased spouse’s year-of-death required minimum distribution (RMD.) Background: A few weeks ago we covered the requirement for the designated beneficiary to take the deceased IRA owner’s ‘final’ RMD if he/she had not taken […]

Take-Away: Each year noted Nevada attorney Steve Oshins publishes a list or ranking of state trust laws that identifies the ‘best’ jurisdiction in which to situs a trust. Michigan’s rankings suggest that it is not viewed as much of a ‘trust haven’ compared to other states, including our immediate neighbors to the south. Delaware fares […]

Take-Away: If an individual wants to exploit their opportunity to make sizeable gifts while their gift tax exemption is large, they should fight the urge to continue to use the gifted asset. The next best approach is to enter into a formal lease with the donee to use and enjoy the gifted asset. Background: You […]

  Take-Away: A California appeals court held earlier this month that named parties in a trust dispute who refused to participate in court ordered mediation forfeited their claimed interest in the trust. This seems to be a departure from prior law which has held that a trust is not a contract voluntarily entered into by […]

Take-Away: In its most recent publication, the IRS made a subtle change in when an excess IRA contribution needs to be corrected, i.e. withdrawn, in order to avoid the 6% penalty for excess IRA contributions. Background: The IRS recently updated its Publication 590 that deals with distributions from IRAs, including how to ‘fix’ an excess […]

Take-Away: Fiduciary accountings are different from tax or financial statement accountings, the big difference being that fiduciary accountings must allocate between principal and income. Background: Professional fiduciaries are fully aware of their responsibilities to account to beneficiaries and courts following the Uniform Fiduciary Principal and Income Act, which has been adopted in Michigan. That is […]

Take-Away: The IRS just published its inflation adjusted amounts for Health Savings Accounts (HSA’s) for 2022. Source: Revenue Procedure 2021-25, 2021-21 IRB (May 10,2021) Summary: The inflation-adjusted annual limitation on deductions for Health Savings Accounts [IRC 223(b)(2)(A)] for 2022 follow: – Individual: The annual limitation on deductions for an individual with self-coverage under a high […]

Take-Away: In a recent Private Letter Ruling the IRS clarified that an irrevocable trust can hold an annuity and not run afoul of IRC 72(u)(1). Background: There is a lot of confusion surrounding if an irrevocable trust can hold a tax-sheltered annuity. That confusion stems from the provisions of the Tax Code that suggest that […]

Take-Away: If an individual is given a limited power of appointment over trust assets, the settlor of the trust should be expressly alerted to the fact that the exercise of that limited power of appointment could effectively disinherit the settlor’s heirs who are the trust’s remainder beneficiaries. Background: Adding limited powers of appointment to a […]

Take-Away: The IRS recently announced that it will be targeting solo 401(k) plans for audit, suggesting that the IRS believes that such qualified plans are being abused. Background: A solo 401(k) plan, or also called a one-participant plan, are growing in popularity as an alternative to a SEP or SIMPLE IRA for self-employed individuals. While […]