Take-Away: Much has been written about ‘upstream’ planning, where appreciated assets are gifted to an elderly parent with the purpose of receiving a step-up in the income tax basis of the gifted assets on the death of the parent. Much less has been written about the benefit to ‘downstream’ planning, where assets are transferred to […]

Take-Away: In 2020, there were more than 71,000 ABLE accounts that held more than $470 million assets. The average ABLE account held $6,600 in assets.  It took the Treasury Department six years to publish Final Regulations with regard to ABLE accounts. The Final Regulations were published on October 1, 2020; fortunately, there were few surprises […]

Take-Away: This month the IRS issued a Release that encourages individuals to take necessary actions in the final weeks of 2020 to help timely file their income tax returns early in 2021. Background: In its Release [IR 2020-272, December 8, 2020] the IRS pointed out a couple of reminders to assist individuals with filing their […]

Take-Away: On the first anniversary of the SECURE Act, the changes that it brought to retirement account distributions has resulting in some changes to how advice is given to individuals with large retirement account balances. Background: The SECURE Act eliminated stretch IRA distributions for most nonspousal beneficiaries, replacing lifetime IRA distributions from an inherited IRA […]

Take-Away: On October 13, 2020, the Social Security Administration announced the cost-of-living adjustment to social security benefits to begin on January 1, 2021. Changes for 2021: Cost-of-Living Adjustment: The cost of living  increase to social security benefits will be 3% beginning January 1, 2021. Medicare Premiums: The adjustment to the monthly Medicare premiums for 2021 […]

The applicable federal rates of interest for November, 2020 were published today. Short-Term AFR Rate (less than 3 years duration):         0.13% Mid-Term AFR Rate (between 3 and 9 years duration): 0.39% Long-term AFR Rate (longer than 8 years duration):      1.17% IRC 7520 Rate (used to value life estates, and other retained interests, e.g. GRATs, QPRTs, […]

I recently wrote a missive that said that with the CARES Act, each spouse could claim an ‘above the line,’ i.e. directly deducted from adjusted gross income, tax deduction for a $300 cash gift to a publically supported charity for 2020. I said that a married couple could thus deduct, between them, $600 for cash […]

Take-Away: There seems to be some confusion if an IRA is a trust, or not a trust, depending upon the source of ‘law’ that is referred to. If an IRA is a trust, then its custodian has fiduciary duties to the IRA owner and the IRA beneficiaries. Background: Probably most individuals who establish an IRA […]

Take-Away: Most distributions from retirement accounts are taxed as ordinary income. However, there are several situations defined in the Tax Code when the distribution from a retirement account will not be subject to immediate income taxation. Background: As a general rule, distributions from a retirement plan are taxable as ordinary income to the participant whose […]

Take-Away: Charitable Lead Annuity Trusts (CLATs) are an underutilized estate planning tool that can provide a large current income tax charitable deduction, in addition to the prospect of shifting considerable wealth to the remainder beneficiaries of the CLAT gift tax-free. The historically low IRC 7520 rate that currently prevails makes the CLAT even more beneficial […]