Buried inside the SECURE Act 2.0 Proposed Regulations is a potential ‘trap’ for some surviving spouses. The Proposed Regulations require a surviving spouse to take a required minimum distribution (RMD) of the deceased spouse’s retirement account before the surviving spouse can engage in a spousal rollover. The Proposed Regulations call this either a catch-up or hypothetical RMD. Apparently, the IRS discovered a ‘loophole’ in the distribution rules that could be exploited by a surviving spouse. (God forbid a widow or widower might find a small tax break in the IRS’s world!).

There are peculiar rules associated with excess retirement plan contributions, and especially that rules that provide when the earnings on those excess contributions must be reported by the account owner. There is also a remote possibility of double taxation of the excess contribution and its earnings.

Making an irrevocable trust a beneficiary owned trust (BDOT) circumvents the high-income tax rate faced by the trust.

The SECURE Act 2.0 provides new statutes of limitations for excess contributions to an IRA or the failure to take a required minimum distribution. However, these new statutes of limitations are not retroactive, which means that prior excess contributions or failures to take RMDs must still be formally fixed, despite the running of the statute of limitations.

: I was asked to share my thoughts on the impact of the election of Mr. Trump as President on the future of estate planning. Frankly, I’m not smart enough to form any opinions, but I confess that I do read lots of articles where others have no problem coming up with their own thoughts and predictions (for which they are never held accountable!) From that reading I have formed a couple of conclusions, none of which will come as a surprise.

There were some conflicting stories coming out of Washington DC last week regarding what to expect when the ‘new’ Congress convenes early next year to work on the tax legislation in its first 100 days.

A Health and Education Exclusion Trust ( or, HEET) is one way to fund the education expenses and other medical expenses of multiple generations of trust beneficiaries without ‘wasting’ the settlor’s generation skipping transfer tax (GSTT) exemption.

There is no clear answer if an individual going through a divorce also holds an interest in an irrevocable trust whether the divorce court will take that interest into account when fashioning an equitable distribution of the marital estate, or in making a spousal support award. States have very different laws when it comes to how an irrevocable trust is treated in a divorce. Using a prenuptial agreement to support the beneficial interest in the trust may be useful to protect the beneficiary’s interest.

If a trust is classified as a foreign trust, it might be taxed either to its settlor or beneficiary as a grantor trust for income tax reporting purposes.

We can expect the ‘new’ Congress to begin to immediately take up the extension of the 2017 Tax Act and many of its provisions when it convenes early next month. Another piece of legislation that is expected to be visited by Congress early in 2025 is the proposed ACE Act, which has a fair amount of bipartisan support. The Accelerate Charitable Efforts Act, or ACE Act, focuses on eliminating perceived abuses of donor advised funds (DAFs.)