Take-Away: Regardless who wins as the next US President, there is a strong likelihood that the rule that provides an income tax basis step-up on the owner’s death will be subject to change. Background: What do Joe Biden and Donald Trump have in common, besides both wanting to be elected President in 2020? They both […]

Take-Away: The Tax Court recently held that a donor’s gift of closely held appreciated stock to a donor advised fund was not a taxable redemption of the stock, thus sustaining the donor’s charitable income tax deduction. Reported Decision: Dickenson et ux. v Commissioner, No. 9526-19 Tax Court Memo 2020-128 (September 3, 2020) Facts: The donor […]

Take-Away: As previously covered, there are several estate planning strategies that can be exploited using the historically low applicable federal rates (AFRs) of interest. One strategy that should be avoided with regard to the low AFR interest rates, however, is using a promissory note with a low AFR rate of interest as a ‘swapped’ asset […]

Take-Away: Modern trusts expressly give to the trustee the authority to change the governing law of a trust, or the situs of a trust.  Some trusts are silent on the trustee’s ability to change the governing law or situs of the trust. As states engage in competition to attract trust ‘business’ by changing their trust […]

Take-Away: Ladybird deeds and retained life estates are a cheap, popular, and albeit informal, ways in which to transfer real estate on death as part of an estate plan. However, there could be a risk to the remainder holder of such real estate, if he or she later finds themselves in a divorce. Background: For […]

Take-Away: Most retirement accounts are protected from creditors or in a bankruptcy proceeding. Note the use of the word most. As with almost all of the retirement planning, there are multiple rules that apply to different types of retirement plans, including federal rules (ERISA), federal bankruptcy rules, and state-specific creditor protection exemption rules. As a […]

Take-Away: The SECURE Act created an exception to the 10% penalty otherwise imposed on a distribution from a retirement account for expenses that are incurred in a birth or an adoption. The IRS just issued guidance on how these new rules will be interpreted and enforced. Background: The SECURE Act added another exception to the […]

Take-Away: Normally a trustee can make loans to trust beneficiaries, but caution needs to be exercised before the trustee makes the loan. Background: Last week a trust relationship officer asked if the trustee could honor a beneficiary’s request for a loan from an irrevocable trust when the trust powers were silent on making loans. In […]

Take-Away: As we approach the last calendar quarter of 2020 and individuals begin to think about their final 2020 income tax liability, adjustments may be made to their elective contributions to their employer’s 401(k) plan to reduce their reportable taxable income for the year. However, they often forget that there are compensation limits imposed by […]

Take-Away: The Tax Code’s string provisions often create unexpected federal estate tax exposure, cause assets that were transferred during the transferor’s lifetime to be included in the transferor’s taxable estate for federal estate tax calculation purposes. Fortunately, if the lifetime transfer was a bona fide sale, then none of the string provisions will apply to […]