Take-Away: One of the benefits of a grantor trust for income tax reporting purposes is the trustee’s ability to reimburse the settlor (grantor) for the payment of the trust’s income tax liability. The reimbursement of those income taxes, however, might expose the trust’s assets to inclusion in the grantor’s taxable estate, while also raising questions […]

Take-Away: A deceased IRA owner’s minor children are eligible designated beneficiaries under the SECURE Act. That means that if the minor child is named as beneficiary of their deceased parent’s IRA, the minor child can take required minimum distributions (RMD) using their own life expectancy but only so long as they are minors. The problem […]

Take-Away: There is a lot of angst these days with regard to the possible reduction in an individual’s lifetime federal transfer tax credit. It is also possible that the utility of an irrevocable life insurance trust, or ILIT, may also be in jeopardy if many of the advantages of a grantor trust are eliminated. Background: […]

Take-Away: While a wholly discretionary trust in Michigan provides excellent creditor protection, much of that protection can be lost in how the trust is administered. Setting the discretionary trust on ‘cruise-control’ is an invitation to a court to find that the beneficiary possesses certain rights in the trust. Background: We have covered at length in […]

Take-Away: Roth IRA contributions can be recharacterized, or changed, to a traditional IRA contribution. However, Roth IRA conversions can no longer be recharacterized back to a traditional IRA. Roth contributions vs. Roth conversions can ultimately lead to confusion. Background: A Roth IRA contribution can be recharacterized, or changed, to a traditional IRA contribution. Similarly, a […]

Update: A couple of times in the past year a federal court case was summarized that deals with the gift of stock to a donor advised fund, Fairbain v. Fidelity Investments Charitable Gift Fund, a California federal District Court case. The dispute dealt with restrictions imposed on the donors’ transfer of stock to a donor […]

Take-Away: One of the conditions to enjoy tax-free distributions from Roth IRAs and Roth 401(k) accounts is that the distribution must satisfy a 5-year holding period to be a qualified, tax-free distribution. The failure to satisfy the 5-year holding period subjects the earnings on the distributed Roth funds to be taxed. Background: With the threat […]

Take-Away: While valuation discounts, e.g. lack of control, lack of marketability, can effectively reduce the value of assets for federal estate and gift tax purposes, those same valuation discounts can come back and haunt a decedent at the time of his or her death when it comes to valuing assets that create estate tax deductions, […]

Take-Away: The SECURE Act changed distributions for many successor beneficiaries, depending on when the designated beneficiary of the inherited IRA dies. As time passes, the new successor beneficiary distribution rules will apply to more individuals, perhaps subjecting them to an even shorter distribution period than the SECURE Act’s 10-year payout rule. Background: A successor beneficiary […]

Take-Away: Courts often struggle when it comes to the implied disinheritance of a child or grandchild under a Will or Trust. If an excluded individual falls within the scope of an issue, heir or descendant, it is wise to expressly name that person and expressly state that such person is not to take any distribution […]