Take-Away: Some gifts made within three years of a donor’s death are ‘added back’ to the donor’s taxable estate. More to the point, if the donor’s lifetime gift is subject to a retained interest or power over the gifted asset, the full value of the gift is included in the deceased donor’s taxable estate at […]

Take-Away: While the current low interest rate environment is favorable for many estate planning strategies, the low IRC 7520 rate makes some charitable gifts less desirable than before because the income tax deduction for certain charitable gifts will be dramatically reduced. These low interest rates will impact charitable gift annuities and charitable remainder annuity trusts, […]

Take-Away: Like a grantor retained annuity trust (GRAT), a sale to an intentionally defective grantor trust (IDGT) also benefits from the current low interest rates. An IDGT functions differently than a GRAT, but it is an effective way to freeze the value of the Grantor’s estate for estate tax purposes. The GRAT’s annuity potentially brings […]

Take-Away: Many wealthy individuals grudgingly acknowledge that they should take advantage of today’s $11.85 million federal transfer tax exemption. However, they are reluctant to do so out of a fear that they may need access to those transferred assets sometime in the future. Estate planning strategies exist that can reassure those individuals that they can […]

Take-Away: With interest rates so long, intra-family loans using those low interest rates have garnered interest. Sometimes, however, the IRS claims that the loan is really a taxable gift. How the transaction is structured and reported will go a long way to demonstrate that no gift was intended. Background: The US Tax Court has often […]

Take-Away: A qualified charitable distribution (QCD) is an excellent way to carry out philanthropic objectives. However, there are several restrictions on the use of a QCD. In 2020, with one of the provisions of the CARES Act, a couple of the impediments to the QCD can be avoided if a donor wishes to make a […]

Tale-Away: IRC 7872 provides that if an individual structures an intrafamily loan consistent with what that Tax Code requires, i.e. using the applicable federal rate (AFR) of interest for the month of the loan, that loan will not be treated as a gift for gift tax purposes. If IRC 7872 is followed, the promissory note […]

Take-Away: IRC 7872 provides that if an individual structures an intrafamily loan consistent with what that Tax Code requires, i.e. using the applicable federal rate (AFR) of interest for the month of the loan, that loan will not be treated as a gift for gift tax purposes. If IRC 7872 is followed, the promissory note […]

Take-Away: The Michigan Court of Appeals recently provided guidance on when gifts are authorized to be made from a Trust, including gifts to the trustee and the trustee’s children. Reported Decision: In re Estate of Vernon Stephenson, Michigan Court of Appeals, No. 348207, (July 30, 2020) Unpublished Facts: The parents created reciprocal durable powers of […]

Take-Away: Irrevocable trusts are heavily taxed when they accumulate income. A mistaken belief is when an IRA is paid to the Trust that taxable income can be distributed to the income beneficiary of the Trust and avoid the high income tax brackets at the Trust’s level. That is not the case when the Trust is […]