Monday, June 23, 2014

The 7520 rate for July is holding steady at 2.2%.

The July 2014 Applicable Federal Interest Rates can be found here.

July2014

Monday, June 23, 2014

US Supreme CourtOn June 12, the United States Supreme Court in Clark v Rameker resolved the question that has recently split the 5th and 7th Circuits— Are inherited IRAs protected from the beneficiary’s creditors in a bankruptcy proceeding? The Court unanimously held that they are not.

An inherited IRA is a traditional or Roth IRA that has been inherited by a beneficiary after the death of the owner. This term does not include an IRA that has been “rolled over” by a spouse beneficiary into her own IRA.

In order to make their decision, the Court had to determine whether an inherited IRA constitutes “retirement funds”, which are exempt assets in a bankruptcy estate.

The Court focused on three legal characteristics of inherited IRAs that led to their conclusion that the assets in an inherited IRA are not objectively set aside for the purpose of retirement: (more…)

Monday, June 23, 2014

176961933Another recent court decision has looked at the constitutionality of the State imposing state income tax on an irrevocable trust. Last year, the Court in McNeil v. Commonwealth of Pennsylvania held that Pennsylvania’s attempt to tax the McNeil trusts, whose connection to Pennsylvania was (1) the residency of the settlor at the time the trust was created and (2) the residency of the trust’s discretionary beneficiaries was an unconstitutional violation of the Commerce Clause of the United States Constitution. (more…)

Monday, June 16, 2014

453118507Last week, we discussed the important issue that settlors, beneficiaries, and trustees of a trust should be thinking about—Do You Know Which States Are Trying to Tax Your Trust?  Two states’ courts have recently looked at what constitutes sufficient minimum contacts to subject a trust to the State’s income tax laws.  In this blog, we will discuss Illinois’ decision in Linn v. Dep’t of Revenue.  Come back next week for our discussion of Pennsylvania’s decision in McNeil v. Commonwealth of Pennsylvania. (more…)

Monday, June 9, 2014

451594605In an environment in which states are continuously searching for methods of increasing tax revenues, a major consideration for any settlor, beneficiary or trustee of a trust should be where the trust might be subject to income tax. The days of a trust being taxed in the state where it has its “principal place of administration” are quickly fading, as we enter into a new era in which states are increasing attempting to tax trusts with minimal contacts to the jurisdiction. (more…)

Monday, June 2, 2014

123820206It’s June.  Wedding season is upon us.  It is a good time to think about prenuptial agreements. If you are engaged to be married, should you have a prenuptial agreement? At the minimum, you should at least consider the implications of marriage with or without such an agreement. (more…)