A Fiduciary’s Duties and Fees In The Determination of Heirs Process

June 13, 2024

To what extent can a fiduciary of an estate or trust involve himself, herself in the process in the determination of heirs? The answer depends on context. Beware of the issues and research the issue wherever you are. If a search is necessary to give notice or distribution, do it and follow the rules of due diligence as suggested above.on context. Beware of the issues and research the issue wherever you are. If a search is necessary to give notice or distribution, do it and follow the rules of due diligence as suggested above.

Is a Restriction in a Partnership Valid When It Conflicts with a Right of Inheritance?

May 15, 2024

Partnership agreements routinely restrict the assignment of ownership interests unless the remaining partners consent to the transfer. Many of those Partnership transfer clauses allow for transfer without consent if the assignment is to a family member or acquisition is through the right of inheritance.

IRS’s Heavy Oversight of Tax Preparers Creates Chilling Effect

March 27, 2024

IRS intrusiveness into the professional practices of tax preparers has grown steadily in the past decade. This has created a chilling effect on the tax industry.

How to Add Two Paragraphs to Your General Powers of Attorney So You Can Cure Defects in Your Form 2848 and Represent Clients Before the IRS

March 11, 2024

An IRS Form 2848 authorizes an individual to represent a taxpayer. According to the IRS instructions for Form 2848, Form 2848 is used to authorize a representative to perform all acts that a taxpayer can perform with respect to matters described in the power of attorney.

Helping Your Clients Select A Whole Life Policy

December 27, 2023

The critical factor in selecting the best deal wasn’t the amount of the annual premium. It was the “vanish.” The vanish is a projected number of years after which the policy has enough funding to sustain itself without further premiums being paid.

The Private Benefit Doctrine and Tax-Exempt Entities

November 27, 2023

Charitable organizations are exempt from income tax under Internal Revenue Code (IRC) §501(c)(3) if they are both organized and operated exclusively for one or more of the public purposes specified in that code section. An organization failing to meet either an organizational test in its formation documents or an operational test in actual practice is not exempt.

Jury Trials Forbidden in Most Suits Against The Federal Government: Why It Matters

November 27, 2023

Except for lawsuits for tax refunds, jury trials are forbidden in lawsuits against the federal government. In Damsky v. Zavatt, the government sued in New York to foreclose its tax liens on property transferred from a delinquent taxpayer’s wife to her husband and other third parties.

Alan A. May & Neal Nusholtz on In Re JLD Living Trust

November 15, 2023

What does the JLD Living Trust case tell us? It tells us there is a way for a settlor to rest in peace by having a court determine the validity of the estate plan while he or she is still alive. The JLD case opens the door to pre-death litigation of an estate plan in those situations where a settlor wants certainty and to avoid post-mortem contention over the terms of their estate plan.

In Re Ronald Schaddelee Irrevocable Trust: Is a Trust a Contract and What If It Is?

August 30, 2023

Typically, in estate planning trusts, the settlor and the trustee are the same person. Having only one person involved in the creation of a trust prevents an essential element of a contract — a meeting of the minds (aggretatio mentium).

Standing to Contest a Subsequent Testamentary Document

August 22, 2023

Does a trustee have standing to challenge a change to a trust of which he or she is the trustee? Alan May once represented a trustee in a matter where the trustee was named as trustee in an antecedent trust and the subsequent restated trust only made one change. It named a new trustee.

An Explanation as to Why Having Powers of Withdrawal as an Alternative to Distributions Should be Included in Your Trust Repair Toolkit

July 21, 2023

Powers of withdrawal as an alternative to distributions can be used to save income taxes, capital gains taxes, estate taxes and generation skipping transfer taxes.

The Litigating Lawyer’s Right of Privacy and the Work Product Doctrine

June 23, 2023

Unlike the attorney-client privilege, the attorney has an independent privacy interest in his work product and may assert the work product doctrine on his own behalf; the doctrine’s protection is not waived simply because the attorney shared the information with his client.

Revenue Collection and the Slippery Slope. How all of our Rights came from Tax Disputes

April 19, 2023

History tells us that over time, government collection of revenue will gravitate to collect the most revenue under circumstances where taxpayers cannot object prior to assessment and that method of revenue collection can develop into abuses that will continue until personal rights are created that limit the collection of revenue.

The Useful Life of a Movie: An Example of How the Tax Law Works

March 31, 2023

Movies are expensive to make but the millions spent in making a movie cannot be deducted as an ordinary and necessary expense under IRC §162(a). The cost must be depreciated in aliquot amounts each year over the useful life of the movie.

Restitution in Criminal Tax Cases and IRS Tax Assessments

March 23, 2023

In the middle of an income tax audit, clients sometimes express a fear that the Internal Revenue Service (“IRS”) will suddenly seize their bank accounts or their home.

Soaking Up Surplus Basic Exclusion Amounts

March 7, 2023

The basic exclusion amount (“BEA”) is the dollar size of a taxable estate above which there is a 40% tax. Gross estates worth less than the BEA need not file an estate tax return. The current BEA is temporarily $12,920,000. If Congress does nothing before 2026, the BEA will drop in January of 2026 to $5 million adjusted for inflation from 2016. Still, Congress could make the BEA into any number, even one larger than the current $12.9 million. As advisors, we need to plan for the uncertain BEA.

The Debt Ceiling Fight Can Affect the Outcome of Future Court Decisions in Federal Tax Cases

February 17, 2023

Lately, inflation has put upward pressure on wages. The debt ceiling fight is putting downward pressure on salaries paid by the U.S. government. That combined dynamic could influence federal judges to make pro government decisions in tax cases so that revenues will increase in the long term.

Clawing Back Nonprobate Transfers to Satisfy Allowances and Claims – An Important Role for Estate Planners

February 3, 2023

A decedent’s will can control whether a personal representative should or should not pursue assets that had been transferred outside of probate, and, as required by law, use those assets to pay creditors and allowances of family members.

Unexpected Values

January 3, 2023

This newsletter uses the expected value approach to examine three life insurance policies with changing death benefits and probabilities. The expected value approach

How to Beat the IRS in Michigan With Just a Few Words

November 23, 2022

Under our federal system, the larger federal government functions within the confines of the smaller states. The concept affects the collection power of the Internal Revenue Service (“IRS”).

Squeezing Every Penny Out of the Uncertain Estate Tax Unified Credit

September 26, 2022

The unified credit against estate tax determines whether a decedent’s estate will or will not owe a 40 percent estate tax. The 40 percent tax would be on the amount of a taxable estate

Why State Optional Community Property Statutes Can Be Easily Challenged by the IRS

September 1, 2022

Five common law states have optional community property statutes which allow surviving spouses to save capital gains taxes by electing community property treatment.1 The Internal Revenue Service (“the IRS”) has specifically refrained from commenting on the
validity of optional community property statutes in its 2016 and 2020

Valuing Spousal Interests for Injured Spouse Tax Refunds

August 24, 2022

This article was written for Leimberg Information Services. Leimberg provides Estate Planning, Employee Benefits and Retirement Planning, Business Entities, Asset Protection Planning, Financial Planning and Charitable Planning Newsletters. They also provide LawThreads®, Actual Text, State Laws, US Code Searcher, and Supersearcher tools.

Is the IRC Section 6695A Appraiser Penalty Only About Money or Is It Something Else

August 5, 2022

When a taxpayer suffers an erroneous tax assessment, under Internal Revenue CodeSection (“IRC”) §7422, the taxpayer can contest the erroneous assessment by paying it, asking for a refund and then suing for a refund in federal district court

The Disregarded Interest Rule Under Internal Revenue Service Code 2652 (c)

June 20, 2022

“catch 22” happens when the act of claiming The Breadth of IRC 2652(c)(2) something contradicts the truth of what is being claimed. The term comes from Joseph Heller’s satirical novel about World War II,

The Uneven Playing Field in Criminal Tax Cases

March 24, 2022

Reuben G. Lensky was an attorney in Portland, Oregon convicted in a 1963 bench trial for tax evasion for the years 1955, 1957, and 1958.

Collecting Your Attorney Fees When Your Probate Estate is Covered in Federal Tax Liens

February 24, 2022

It might happen, one day, that you are representing a deceased estate that has federal tax liabilities exceeding the liquidation value of the estate’s assets.

Drafting to Minimize Income Taxes in (non-Grantor) Complex Trusts

February 24, 2022

With minor exceptions, the income tax rules are the same for estates and trusts. They file the same return, a Form 1041. They both pay

Filing Tax Returns for Conservatorships (or Not)

July 6, 2021

A conservatorship can be defined as a fiduciary beneficiary relationship where a person receives income that ultimately belongs to someone else.

Florida May Sweeten the Pot for Michigan Snowbirds

May 27, 2021

On August 22, 2020, the Real Property, Probate and Trust Law Section of the Florida Bar voted to send a proposed bill to the Florida legislature entitled

Drafting Tips for Estate Planners Who Want to Save Income Taxes

September 25, 2020

This article attempts to give useful tax advice to estate planners who fall into a trance when they see the letters “IRC” followed by the symbol

Facilitative Costs and the Tax Ramifications of Investment Expenses

February 25, 2020

Suppose in 2019 that you are trustee of a $3 million simple trust setup after the death of a second parent. The trust will distribute

Estate Planning for Clients With Heirs That Have Large Tax Liabilities

January 30, 2020

When somebody doesn’t pay their federal tax-es, two things happen. Immediately, the United States has an unrecorded lien upon all property belonging to the delinquent taxpayer.

Perpetual Levies and The Statute of Limitations

September 24, 2019

Gold Forever Music, Inc. (“Gold Forever”) is a Detroit company formed in 1967 to publish and
market music for its songwriters who are under contract to receive one-half of performance

Probate Petitions for Instructions and Res Judicata

May 24, 2019

his article addresses the question of wheth-er a court order construing the terms of a trust would serve as a res judicata bar against future constructions of the same terms

The Sixth Circuit’s Lingering Mystery of Fifth Amendment Practical Undercompensation

October 11, 2017

The eminent domain power of government to take property for public use dates back at least to Rome in the fifth century C.E.1 Recently, British

Tax Law History – How Britain Tried To Intimidate The Colonial Taxpayers Into Compliance

September 29, 2016

Published in the 2017 volume of Journal of the American Revolution.

The Prompt and Certain Collection of Delinquent Taxes

September 1, 2016

If it has not happened yet, one of your clients may one day have an Internal Revenue Code § 74031 problem. The National Taxpayer Advocate’s annual report has ranked § 7403 in the top 10 tax issues most frequently litigated

Tax Law History – How John Adams Won John Hancock’s Tax Trial

August 30, 2016

Published in the 2016 volume of Journal of the American Revolution.

Infectious Tax Liabilities

May 10, 2016

If you acquire property with a federal tax lien attached, it can be levied upon for sale to pay the transferor’s taxes. What if you owned property you did not acquire

Valuation Concerns Under Section 7403

June 27, 2015

When valuing an individual’s partial ownership in a piece of real estate, would it matter if that person lived on the property?

Michigan Tax Lawyer – Beware of Being a Preparer

September 27, 2012

The Internal Revenue Service estimates that between $11 billion and almost $14 billion in erroneous Earned Income Tax Credit (EITC – a refundable credit for low income taxpayers) clams are paid annually.

You May Be a Tax Return Preparer

August 27, 2012

In 2011, Congress increased the penalty for each failure of a preparer to comply with due diligence requirements in preparing a tax return from $100 to $500. This was after the Internal Revenue Service (IRS) paid billions

Federal Tax Liens of One Spouse in Divorce

August 27, 2012

After filing for divorce, spouses often file separate tax returns. Spouses are jointly liable on joint returns, and one spouse might cause an unexpected income tax liability in an income tax audit (subject to the innocent spouse rules).

Tax Law, Economics, and Constitutional Rights

July 7, 1998

On October 7, 1996, four Supreme Court justices refused, without explanation, to participate in the case of Hatter v United States, 117 S Ct 39 (1996). In that case, some 80 federal judges had sought income tax refunds for as much as $75,000. Because of the abstentions, the Supreme Court lacked a quorum. The appeals court ruling allowing the refunds was automatically affirmed.

A Brief Review of the History of the Deficit and Tax Reform

July 23, 1995

Suppose a particular criminal statute is more difficult to interpret than the statute in Ratzlaff and that this results in a 70% chance of error.

Swearing About Taxes

November 23, 1993

In 1754 the Massachusetts Legislature
passed a liquor excise tax bill requiring consumers to account to tax collectors on oath,

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