Take-Away: As we approach the end of the calendar year, at a time when end-of-the-year gifts might play a more prominent role than in years past, a gift of a fractional interest in real estate with substantial valuation discounts should be considered by the donor. Background: As has been reported over the past 2 months […]

Take-Away: A Remainder Purchase Marital Trust (RPM Trust) is sometimes described as an alternative to a spousal lifetime access trust (SLAT) or a grantor retained annuity trust (GRAT.) Like a SLAT or a GRAT, an RPM Trust is a sophisticated estate planning technique that is intended to remove assets from the spouses’ taxable estates, with […]

Take-Away: Michigan’s Prudent Investor Rule requires that a trustee take into consideration the impact of inflation on the trust assets’ purchasing power. That fiduciary obligation can pose a problem for the trustee of an Irrevocable Life Insurance Trust (ILIT) which holds a life insurance policy that does not grow it’s death benefit over time. Background: […]

AFR Changes: The October, 2020 AFR interest rates and the IRC 7520 interest rate were released by the IRS yesterday. Short-term AFR Rate:     0.14% Mid-term AFR Rate:        0.38% Long-term AFR Rate:       1.12%  (that is up from 1.0% for September) IRC 7520 Rate:                  0.40%  (the rate used to value life estate and retained interests in CRATs, […]

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 […]