Take-Away: Just because an individual is diagnosed with dementia, or they have a court appointed conservator, does not automatically mean that the individual does not possess  testamentary capacity to sign either a valid Will or Trust. Background: Testamentary capacity to sign a Will is described in the Estate and Protected Individuals Code (EPIC.) If over […]

Take-Away: Beginning in 2022 the IRS will begin using longer life expectancies to calculate required minimum distributions (RMDs.)With longer life expectancies, annual RMD amounts will drop between 0.3% to 0.5%. Background: Lifetime RMDs which are taxed as ordinary income must be taken from an individual’s retirement account each year beginning in the year that the […]

Take-Away: Reporting to and communicating with trust beneficiaries is one of the principal duties of a trustee. Those responsibilities could be altered if Michigan decides to make changes to its Trust Code to permit quiet trusts. Background: One of the big ‘eye-openers’ I have had in the past five years since leaving the practice of […]

Take-Away: The IRS’s rollover rules are highly complicated. Often there is confusion when an amount is rolled over at the end of a calendar year. It is important to remember that the one-rollover per year rule is a 365-day rule, not a calendar year rule. Background: Often there is confusion when an IRA owner rolls […]

Take-Away: Many unsuspecting individuals serve as trustees of an irrevocable life insurance trust (ILIT.) Most of those individuals are clueless as to the fiduciary responsibilities associated with that role and their corresponding exposure to personal liability. ILIT Trustees: If an individual agrees, often as an accommodation to a family member or friend, to serve as […]

Take-Away: In the past the income and estate tax benefits of a grantor trust have been covered. Also previously covered is the fact that most spousal lifetime access trusts (SLATs) are grantor trusts. It is possible to structure a SLAT to not be a grantor trust, but that classification can be toggled on-and-off in how […]

Take-Away: The SECURE Act’s new 10-year distribution requirement requires present value calculations to determine whether it is best to defer taking any distributions from an inherited IRA until the tenth year, or to take distributions each year from the inherited IRA, or in some other pattern. Background: The Tax Code essentially provides two different situations […]

Take-Away: While grantor trusts are popular in estate planning from a gift, estate, and GST perspective, non-grantor trusts are gaining popularity for a variety of income tax reasons. If the income tax rules are changed by Congress, the use of non-grantor trusts will gain even more attention, along with the possible use of multiple non-grantor […]

Take-Away: An inherited IRA cannot be rolled over to another inherited IRA. Background: We are accustomed to individuals making a 60-day rollover of their IRA to another IRA. [IRC 408(d)(3).] We normally caution those individuals against such a move since mistakes can lead to missing the 60-day deadline, in turn leading to a taxable distribution […]

Take-Away: As we learn more about the prospect of certain tax law changes, such as the dramatic curtailment of annual exclusion gifts and its inevitable impact on irrevocable life insurance trusts (ILITs), third-party premium financing arrangements through loans may become a more efficient way to maintain life insurance policies held in ILITs, providing liquidity to […]