Saturday, September 24, 2011
Wednesday, September 21, 2011
- $60,000 in value for all motor vehicles, MCL 257.236(2)
- $100,000 for all boats and watercraft, MCL 324.80312(3)
Tuesday, September 20, 2011
- A donor gives a public library a $1,000 gift.
- Under current law, the $1,000 is a deduction from taxable income
- The net effect is that he saves $350 on his taxes. The net cost of his gift is $650.
- Under the proposal, the savings would be limited to 28%, or $280. The net cost of his gift is $70 higher.
Tuesday, September 13, 2011
- The account must be transferred, not distributed. If the funds are paid from the account, it is a distribution, and this is a taxable event. A distribution from the account cannot be rolled over, as with an rollover from a qualified plan to an IRA.
- The transfer must be ordered by a court, in
- a decree of divorce
- a decree of separate maintenance, in states which recognize such decrees
- a written agreement "incident to" (incorporated in) a judgment of divorce or separate maintenance
- A written separation agreement or a court's support order which is not incorporated into one of the orders identified above is not sufficient to meet the requirements of Section 408(d)(6).
"It is further ordered that the interest of the Husband in the Individual Retirement Account number 94-98334 maintained with the Michigan National Bank is hereby transferred to the Wife and shall be held as her account as provided in Section 408(d)(6) of the Internal Revenue Code."
Wednesday, September 7, 2011
The original purchase of a cottage, as with the purchase of any big-ticket item, is an economic decision. If you are looking at a cottage that will cost you $100,000, you may choose to buy if you want the cottage more than you want to keep your $100,000. You will do so, of course, only if you believe that you have the resources to make the payments that will be needed to keep it in good condition going forward.
Like most owners, you will want your children to enjoy it after you are gone. But what you want and what your children will want, when the time comes, may be very different.
A child who succeeds to the interest of the original buyer through inheritance may not feel he is making an economic decision with immediate consequences. He will soon find, however, that the costs of upkeep are a significant expense to him. And if he is not using it as often as his co-owners, he may resent being expected to share those costs equally.
One way of dealing with the acquisition in an inheritance scenario is to make the issue of succession an immediate economic decision for the beneficiaries by the use of life insurance. Make the beneficiaries decide, at the outset, whether they really want to participate in owning and using the cottage.
Let us assume that D has four children and owns a 100% interest in an LLC whose sole asset is a cottage worth $100,000. He buys insurance on his life with a $100,000 death benefit. The proceeds are payable to the LLC. The LLC is directed to use the funds to buy out the interests of those who do not want to inherit the cottage. The remaining funds will be used to pay for upkeep and repairs.
Using this approach, each child may opt to receive $25,000 in cash if he prefers to do so instead of continuing as a member of the LLC. Each beneficiary will decide at the outset whether a partial interest in the cottage is worth more to him than the $25,000 in cash. The beneficiaries who remain get a better deal: a partial interest in the LLC which owns the cottage and has the remaining funds.
Of course, once the funds are used up, the remaining member(s) will have to contribute to repairs and upkeep.
Friday, September 2, 2011
In July 2018, after nearly 40 years of active, full-time practice, I scaled back to part-time practice. I continue to work about half-time...
The Lion Cub deed is an elusive creature. It is fleetingly mentioned on the web sites of some Michigan estate planning and real estate attor...
We have previously noted* on these pages that an important part of succession planning is gathering your key information such as account num...
We recently posted our commentary on the use of a so-called “lion cub” deed, noting that two or more people who are granted ownership of re...