Take-Away: It pays to use definitions in Wills and Trusts, especially when using words like spouse. Background: Some Wills and most Trusts are too long in the eyes of the testator or settlor. When the instrument of transfer contains several paragraphs of definitions, that only adds to the document’s length, and the frustration of the […]

Take Away: Even when a trust is irrevocable, for federal gift tax purposes it is possible that the transfers by the settlor to that irrevocable trust will be treated as incomplete, thus causing the value of the trust’s assets to be taxed in the settlor’s estate at death. Incomplete gifts have gained a lot of […]

Take-Away: The 2017 Tax Act dramatically change the tax implications of a divorce settlement. Adjusting to those new tax rules has become a challenge in structuring spousal trusts, since some of the existing rules went unchanged, like the spousal unity rule. Background: The 2017 Tax Act (the Act) made fundamental changes to the income tax […]

Take-Away: A week or so ago a short summary of Bernie Sander’s proposed Bill, “For the 99.5 Percent Act” was provided. Some of its proposals are covered in a bit more depth. Background: The proposed “For the 99.5 Percent Act” is clearly an effort to eliminate many conventional estate planning strategies and principles that have […]

Take-Away: If Senator Bernie Sander’s proposed For the 99.5 Percent Act is adopted, the amount of an individual’s gift tax exemption drops to $1. 0 million, and grantor trusts created or funded after the Bill becomes law will be included in the grantor’s taxable estate. These changes will dramatically impact existing irrevocable life insurance trusts […]

Take-Away: If Senator Bernie Sander’s proposed For the 99.5 Percent Act is adopted, the amount of an individual’s gift tax exemption drops to $1. 0 million, and grantor trusts created or funded after the Bill becomes law will be included in the grantor’s taxable estate. These changes will dramatically impact existing irrevocable life insurance trusts […]

Take-Away: Many tax attributes that an individual accumulates during lifetime from certain assets or transactions end with the individual’s death. While the assets that created the income tax attribution are inherited by the deceased individual’s beneficiaries, the tax attributes that arise from those assets do not. Hence the need to plan to preserve tax attributes. […]

Take-Away: Just when we thought we were finally beginning to understand the SECURE Act, the IRS throws us a curve ball on the 10-year distribution rule. Summary: On April 9, 2021 the IRS issued Publication 590-B with regard to Distributions from Retirement Account Arrangements. In that Publication (page 12) the IRS provides an example which […]

Take-Away: A second home, or vacation home, is an excellent asset to transfer to a spousal lifetime access trust (SLAT). A vacation home normally consumes income rather than generates income. In addition, often the vacation home is an heirloom type of family asset with plenty of memories held by children and grandchildren, which makes it […]

Caution: This summary is pretty technical, but important for ILIT trustees. Take-Away: Due to a recent change in the tax law, newly issued cash value life insurance policies will probably have higher premiums, but that might ultimately result in fewer life insurance policies lapsing prior to the insured’s death. This recent change also is yet […]