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 […]

Take-Away: Family limited partnerships (FLPs) are popular because they permit valuation discounts for interests that are transferred to family members during lifetime, or the retained interests warrant valuation discounts at the time of the senior family member’s death. However, FLPs come under close scrutiny by both the IRS and the US Tax Court, and if […]

Take-Away: The Tax Code permits an IRA owner to take periodic distributions from their IRA prior to age 59 ½ without having to pay the 10% early distribution penalty. While this is an opportunity that many will explore if they are economically devastated due to the pandemic, entering into an substantially equal periodic payment plan […]

Take-Away: Many options exist to make tax deductible charitable gifts before the end of this calendar year. A few options  have been expanded by the CARES Act, but for 2020 only. Disclaimer: The topics in the following summary have been previously reported in my missives, so there is nothing really ‘new’ to report. Rather, this […]

Take-Away: The Michigan Court of Appeals had what may be its first occasion to expressly apply Michigan’s trust decanting statute last month. While the Court focused on an administrative trust decanting,  it neither mentioned  nor applied a decanting under the Michigan Powers of Appointment Act which generally pertains to substantive or material changes to a […]

Take-Away: In its Revenue Procedure 2020-45 the IRS published many estate planning inflation adjusted amounts scheduled to apply in 2021. This Procedure is 28 pages long and covers a variety of topics, taxes and thresholds, like the ‘Kiddie Tax,’ and also the more arcane, e.g. a tax is imposed on arrow shafts at $0.53 per […]

Take-Away: A distribution from a retirement account is deemed to carry out proportionate amounts of the pre- and after-tax contributions in all of the participant’s accounts in the qualified plan, or all of the owner’s traditional IRAs. Calculating that proportion of the distribution that is not taxable can make your head spin when all of […]

Take-Away: Another risk associated with using a family limited partnership (FLP) if the FLP’s assets are included in the transferor’s taxable estate due to IRC 2036 is a potential mismatch between the IRC 2036 inclusion amount and the decedent’s reliance upon the marital deduction. Background: As previously covered, the IRS often successfully challenges estate planning […]