Take-Away: There is a Bill pending in Lansing that would allow a beneficiary of a Trust to intentionally ‘spring’ the Delaware Tax Trap, and thus cause an income tax basis adjustment to the trust’s assets. Background: At a recent breakfast presentation, I mentioned the Bill that would enact legislation to allow a trust beneficiary to […]

Take-Away: A Bill is pending before the U.S. Senate that would materially change the operations of a donor advised fund and private foundation with the goal to accelerate charitable distributions from donor advised funds and private foundations. Background: Those familiar with philanthropy know just how popular the use of donor advised funds have become over […]

Take-Away: The dividends an employee-shareholder receives from a C corporation will be subject to the net investment income tax. IRS Chief Counsel Advisory: Earlier this year the IRS published Chief Counsel Advisory 2021009 (dated January 4, 2021, and released on May 7, 2021) that determined that dividend income that is received by an individual shareholder […]

Take-Away: As a generalization, an inherited IRA cannot be rolled over by the designated beneficiary into a Roth IRA. However, the designated beneficiary who inherits a qualified plan retirement account can roll the inherited account into a Roth IRA. Background: With the threat of higher income taxes looming, many individuals are seriously exploring the benefits […]

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 […]