Take-Away: In a recent Chief Counsel Memorandum the IRS concluded that a charitable remainder annuity trust ‘marketing scheme’ resulted in a sham trust and, therefore, would not provide the claimed tax results as promised. General Counsel Memorandum AM 2020-006, Released June 26, 2020 What was marketed was a purported charitable remainder annuity trust [IRC 664(d)(1)] […]

The AFRs for August, 2020, used for intra-family loans, sales to defective grantor trusts, and the IRC 7520 rate used for valuing retained interests follow: Short-term rate (less than three years):  0.17% Mid-term rate (three to nine years):  0.41% Long-term rate (over nine years in duration):  1.12% IRC 7520 rate, used for the valuation of […]

Take-Away: With the historically low interest rates, there may be a desire to rewrite the terms of outstanding loans to reflect the lower prevailing interest rates. Before an existing loan is rewritten with a lower interest rate, caution needs to be exercised to avoid the tax ramifications of replacing a higher rate debt instrument with […]

Take-Away:  The Michigan Court of Appeals just published a decision in which it found that not all postnuptial agreements made by a happily married Michigan couple are invalid per se and against public policy. This decision also provides an interesting interpretation with regard to prenuptial agreements which have been of questionable enforceability in light of […]

Take-Away: As a gross generalization, the Michigan Trust Code provides a series of default rules when a trust instrument is silent on a question. Only a handful of Michigan Trust Code provisions prevail over the express terms of the trust. A question addressed in a recent court decision is whether the trust instrument’s express provisions […]

Take-Away: Much has been written about the use of a charitable remainder trust as one way to work-around the SECURE Act’s 10-year mandatory distribution rule for most inherited retirement accounts. Recently innovative, albeit somewhat obtuse, alternatives to the use of a charitable remainder trust have surfaced, that include an IRC 678 beneficiary deemed owner trust […]

Take-Away: Surveys and statistics show that more and more Americans cohabit without marriage. Federal and state law reward couples who marry and protect the rights and interests of those who choose to marry. However, there is no comparable protection to the partner in a committed cohabitation relationship, who may have few remedies once the cohabitation […]

Take-Away: If a trustee exercises a decanting power to transfer assets to a new, or second, trust it is possible that the trustee’s transfer may inadvertently cause a taxable gift. Background: As we have covered in the past, Michigan has two separate decanting statutes. Administrative Changes: One statute, found in the Michigan Trust Code, primarily […]

Take-Away: Today’s trust instruments need to contain greater flexibility and thoughtful definitions to guide a trustee that must deal with the needs and desires of the ‘modern family.’   Overview: The long-running  comedy TV show ‘Modern Family’ showed to us just how different contemporary families appear and act when compared to what we normally assume […]

Take-Away: 2019 did not produce many decisions from Michigan appellate courts with regard to trusts and their administration. However, a handful of cases from around the country, in particular Massachusetts, and surprisingly Nebraska, provide some interesting commentary with regard to Wills, Trusts, their interpretation or construction, and their administration. ‘My Issue by Representation’: The Will’s […]