an 06, 2017
The situation described in the preceding two articles in this 4-part series could
significantly affect both estates and beneficiaries. Strict application of formula
bequests (tied to federal and/or state estate tax exemption amounts) in a will or
revocable trust that was drafted before the repeal legislation may lead to results not
intended by the testator. The qualified terminable interest property and credit
shelter (bypass or family part) trust are defined by estate tax references that have
new (and different) meanings. The results may prove to be inconsistent with the
testator’s intent. This is why practitioners need to advise clients of the varying
impact to put them on notice.
In a “friendly” family situation, the resulting issues with how assets are
unintentionally allocated under a new tax regime might be resolved amicably by
using a combination of disclaimers and having beneficiaries alter the disposition
under a will or revocable trust by agreement (assuming that the rights of creditors
and tax authorities are unaffected). However, in strained or complex family settings
that abound, this could cause uncertainty and result in protracted litigation.
Read their commentary here.
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