The Section 7520 rate is 1.8% AFRs Annual Semi-annual Quarterly Monthly Short-term 0.74% 0.74% 0.74% 0.74% Mid-term 1.47% 1.46% 1.46% 1.46% Long-term 2.26% 2.25% 2.24% 2.24%
Bryan Cave’s Private Client Group was recently recognized by US News & World Report’s 2017 “Best Law Firms” as a “National Tier 1” practice in the Trusts and Estates category.
Originally posted by our employee benefits and compensation team, here.
Posted: 31 Oct 2016 12:15 PM PDT
The IRS recently released updated limits for retirement plans. Our summary of those limits (along with the limits from the last few years) is below.
Type of Limitation 2017 2016 2015 2014 Elective Deferrals (401(k), 403(b), 457(b)(2) and 457(c)(1)) $18,000 $18,000 $18,000 $17,500 Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (457(b)(3) and 402(g) provide separate catch-up rules to be considered as appropriate) $6,000 $6,000 $6,000 $5,500 SIMPLE 401(k) or regular SIMPLE plans, Catch-Up Deferrals $3,000 $3,000 $3,000 $2,500 415 limit for Defined Benefit Plans $215,000 $210,000 $210,000 $210,000 415 limit for Defined Contribution Plans $54,000 $53,000 $53,000 $52,000 Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 Annual Compensation Limit for Grandfathered Participants in Governmental Plans Which Followed 401(a)(17) Limits (With Indexing) on July 1,
Rev. Proc. 2016-49
The recent issuance of Rev. Proc. 2016-49, which modifies and supersedes Rev. Proc. 2001-38, now puts the taxpayer in the driver’s seat. Recall that in Rev. Proc. 2001-38, the Service was providing relief for the surviving spouse when an unnecessary QTIP election was made, by treating such a QTIP election as though it had not been made. Practitioners began to question whether Rev. Proc. 2001-38 would render a QTIP election a nullity when made in order to qualify for a state marital deduction where such an election was not needed to reduce the Federal estate tax liability to zero. Then when portability came into the picture, the enhanced concern about basis adjustment at death drove practitioners to want to make a QTIP election even though not needed to reduce the estate tax liability, to permit the surviving spouse to make larger gifts that would not
One of the many requirements that a trust must meet in order for it to qualify as a Charitable Remainder Annuity Trust (“CRAT”) is the “Probability of Exhaustion Test”. This test applies to CRATs whose annuity term is based on one or more lifetimes, and requires the likelihood that the charitable remainder beneficiary will not receive its interest in the trust be 5% or less. If a trust fails the test, then the charitable remainder interest does not qualify for income, gift, or estate tax charitable deductions, and the trust is not exempt from income tax.
Dorrance v. U.S., 2015 WL 8241954 (9th Cir. 2015)
This case is the latest in the cases involving tax impact of the sale of stock received by a policy holder from a mutual life insurance company on demutualization, and a case of first impression at the Federal circuit court level. Here, the Dorrances purchased life insurance policies from several mutual life insurance companies in 1996 to replace the then estimate of their anticipated estate tax liability. In 2003, the Dorrances received stock in the resulting stock company when each of these mutual life insurance companies demutualized in a tax free transaction into a stock company. The Dorrances then sold this stock also in 2003, and reported the sales on their 2003 income tax return as capital gain transactions, reporting a zero cost basis. The Dorrances later filed a claim for refund, now asserting that the stock received in
When the taxpayer in PLR 201547010 decided to invest his IRA assets in a partnership, he forgot to check whether his IRA provider was able to hold an interest in a partnership as an investment in the IRAs for which it served as custodian. While all IRA accounts are able to hold investments in publicly traded securities, i.e. stocks, bonds and mutual funds, not all IRA custodians are set up to handle alternative investments, such as direct ownership of a business, real estate, partnership interests and LLC member interests, in their IRA accounts managed pursuant to their IRA account agreements. In fact, some IRA account agreements specifically preclude ownership of such alternative assets in the IRA accounts covered by the IRA custodian’s account agreement.
In this PLR, Taxpayer A instructed the IRA Custodian to invest his IRA assets in a percentage partnership interest of Partnership C. The IRA Custodian issued
Bryan Cave St. Louis partner, Douglas Stanley, and associate, Jarriot Rook, authored an article in the recently-published spring issue of the St. Louis Bar Journal, concerning the key issues to consider in nonjudicial settlement of fiduciary disputes.
As of January 1, 2016, California allows the use of a “transfer on death” deed for real property. A TOD deed essentially allows a person to execute and record a revocable deed, which grants real property to a beneficiary upon the grantor’s death. Introduced by Assemblyman Mike Gatto (D-Glendale) via AB 139, the TOD is effective by operation of law, the primary purpose of which is to avoid the probate process (which is onerous and expensive in California) and to reduce the need for a revocable trust for certain individuals.
San Bernardino County has posted a sample form.
While the TOD deed may be useful in limited circumstances, it does not supplant the importance of having a revocable trust plan for many individuals.