Take-Away: Several ways exist to obtain an income tax basis adjustment for assets held in a long-time irrevocable trust. The lifetime trust beneficiary can exercise a limited power of appointment in trust for another beneficiary [the Delaware ‘tax trap’]. The trust can be modified to give to the lifetime trust beneficiary a general power of […]

Take-Away: While there were few, if any, relevant last-minute statutes passed in Lansing in late December that impact estate planning in general,   or Wills and Trusts I particular, we can expect some helpful legislative activity in the coming months before the state Legislature takes a long summer break in this, yet another, election year. Much […]

Take-Away: If an individual considers the adoption of a Qualified Dispositions in Trust, aka Michigan’s version of an asset protection trust, the trust instrument may need to restrict the settlor’s retained rights to only direct trust investments or veto trust distributions among the other rights that the settlor may retain in their qualified dispositions trust. […]

Take-Away: For Medicaid  planning purposes some states, but not Michigan, follow the ‘name on the check’ rule, that permits a shift of income from the institutionalized spouse to the community spouse without jeopardizing an institutionalized spouse’s Medicaid eligibility to protect the community spouse. Background: The name on the check rule is a common guideline used […]

Take-Away: In July the Michigan Court of Appeals published a decision that recognizes an electronic document as a valid will. In re Estate of Duane Francis Horton, Michigan Court of Appeals, No. 339737 (July 17, 2018.) A legitimate concern is that this court decision puts even more responsibility on the shoulders of a personal representative […]

Take-Away: Over the last couple of years, and especially after the 2017 Tax Cut and Jobs Act gave taxpayers a dramatic increase in their federal estate tax exemption, there has been a lot written about how to intentionally include the value of assets held in preexisting irrevocable trusts in the trust settlor’s taxable estate at […]

Take-Away:  A no-contest clause in a trust is valid in Michigan, unless the challenger possesses probable cause  to file the contest. Michigan’s statute refers to the enforcement of such a penalty clause if the contest is to the trust or instituting another proceeding relating to the trust. Only now are courts starting to grapple with […]

Take-Away:  Learning the SECURE Act’s new distribution rules, and the exceptions to those rules, will be a new challenge. The SECURE Act provides several new ‘rigid’ rules and effective dates with regard to distributions from inherited retirement accounts. Those new rules can lead to some pretty strange results. A few examples follow- Grandfathered Stretch Distribution […]

Take-Away: An individual who is disabled, as defined by the Social Security Administration, or who is certified as chronically ill, is defined under the SECURE Act as an eligible designated beneficiary who is entitled to use the life-expectancy distribution regime with regard to inherited retirement benefits. One issue associated with these two classifications is how […]

Take-Away: Earlier I addressed how a disabled beneficiary of an inherited IRA account is treated as an eligible designated beneficiary who is entitled to use stretch distributions over his/her life expectancy. However, the Tax Code’s definition of disability is very narrow, and thus hard to meet. A recent case that dealt with the disability waiver […]