Take-Away:  The owner of an IRA or qualified plan account, e.g. 401(k) account, can designate a donor-advised fund as the beneficiary for those taxable assets. The bequest will qualify for a federal estate tax charitable deduction Background: A donor-advised fund is classified as a public charity. IRC 501(c)(3). It receives contributions from an individual donor, […]

Take-Away: The income interest in a charitable remainder trust (CRT) is treated as a capital asset that can be bought, sold, or reinvested just like other capital assets, e.g. real estate. The income interest can be sold to,  or rolled over into, a new CRT if the goal is to change the CRT’s terms. Background:  […]

Take-Away: While the Estates and Protected Individuals Code (EPIC) addresses the impact of a divorce on a spouse’s intestacy rights, it is important to note that some EPIC provisions also expressly deal with the divorce’s impact on  a spouse’s Will or a Trust or other governing instrument. Some of those provisions do not however cross-over […]

Take-Away:  Just  about a year ago the estate planning world sounded an alarm when the IRS published proposed IRC 2704 Regulations that would dramatically curtail valuation discounts associated with closely held family businesses and entities. Families then received something of a reprieve after Treasury and Congress received over 28,000 complaints with regard to those proposed […]

Take-Away: If the owner of an IRA is later in a divorce, the division of the owner’s IRA needs to take place either after the divorce is completed, or there must be  signed property settlement agreement that contractually directs the IRA’s division and that agreement is later incorporated into the Judgment of Divorce, i.e. making […]

Take-Away: Many qualified plans, like 401(k) plans, permit a participant to borrow against his/her account balance. The rules are pretty straight-forward on how to document the loan and how it is paid back. But when those rules are not followed, a deemed distribution from the qualified plan account to the participant occurs, which results in […]

In a report published by the Center on Budget and Policy Priorities on May 5, 2017, the following facts were of note: Only 0.2 per cent of estates are federally taxable; While the top federal estate tax rate is 40%, the average effective estate tax rate is about 17 per cent, after taking into account […]

Take-Away: Naming a charitable remainder trust (CRT) as the designated beneficiary of a decedent’s IRA or 401(k) account is a great way to avoid the technical complications of either a conduit trust or an accumulation trust, or even a QTIP Trust,  but it should be used only so long as the retirement account owner actually […]

Take-Away: One of the bigger surprises in the Senate’s tax reform proposal is that a taxpayer must use a ‘first in, first out’ [FIFO] method when selling or gifting ‘lots’ of publically traded stock. This rule, if passed, results in a major change in the stock basis ordering rules, and would prevent the ‘cherry-picking’ that […]

Take-Away: With the continued increase in the applicable exclusion amount resulting in fewer and fewer taxable estates [it’s $5.6 million per taxpayer beginning in 2018] income tax basis planning has become increasingly important, especially when there is an opportunity to avoid federal estate taxes and still obtain a ‘step-up’ in the income tax basis of […]