Advanced SLAT Issues

In a previous article, we discussed the basics of Spousal Lifetime Access Trusts (“SLATs”).[1] Generally, SLATs are irrevocable trusts established by one spouse during such spouse’s lifetime with the other spouse being a beneficiary of the trust. Often both spouses will establish a SLAT, but they must be carefully structured and administered to prevent application…
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Monetized Installment Sale: Cash Today, Tax Today?

The U.S. Treasury recently issued its “Green Book”[1] which includes, among other items, a proposed increase in the capital gains rate up to 43.4%[2] for taxpayers with incomes over $1 million as well as an elimination of like-kind exchanges where gain deferral will exceed $500,000. This means that taxpayers will be subject to significantly higher…
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The Benefits of a Lifetime CLAT

Anyone looking outside their window (or watching TV) recently knows that we are in a volatile time. Among other things, current volatility results from the ongoing COVID-19 pandemic, an uncertain economy,[1] and upcoming elections. The effects of this include large amounts of government spending,[2] low interest rates,[3] and a reduction of the value of a…
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Creditors Rights to Trust Assets – Mississippi Law Update

As a basic matter, creditors of a trust beneficiary generally do not have access to assets of the trust.[1] The primary exception is that creditors generally can access trust assets distributable to the settlor of the trust, such a trust being considered “self-settled.”[2] Many states have abolished this exception for trusts that satisfy certain statutory…
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Sixth Circuit Approves Asset Protection Through Trusts

Introduction Earl and Margaret Blasingame filed bankruptcy seeking the discharge of over $7.7 million in debt. They claimed to have monthly income below $900 and total assets of less than $6,000. However, Earl and Margaret lived in a “28-acre gated compound” with a heated swimming pool and lighted tennis courts. The residence was adjoined by thousands…
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Are Your Life Insurance Death Benefits Taxable?

The income taxation of life insurance death benefits seems fairly simple initially. Many people know the general rule that death benefits are not subject to income tax. However, there are exceptions that can apply which will cause the beneficiary to owe income tax on the receipt of death benefits. This article describes certain of these…
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