[WSBAPT] Blended Families & Wills

Fri May 22 22:08:05 PDT 2015

See 4.7 and 5.17.6 of Price:

https://books.google.com/books?id=OONYE8-Y0YkC&pg=SA5-PA31&lpg=SA5-PA31&dq=estate+gift+tax+mutual+wills&source=bl&ots=ZgAgB4w2L3&sig=MRXIGu0uI8-1fhKbrMhPL2sShdQ&hl=en&sa=X&ei=kwpgVdjaJsKrsAXks4DIAQ&ved=0CCYQ6AEwAg#v=onepage&q=estate%20gift%20tax%20mutual%20wills&f=false

John Sullivan

Sent from my iPhone

> On May 22, 2015, at 7:24 PM, jeffrey winter <jdwinter at hotmail.com> wrote:
> 
> I seem to recall there being negative tax consequences with contractual wills. 
> 
> Sent from my iPhone
> 
>> On May 22, 2015, at 4:09 PM, Mark Higgins <markthiggins at gmail.com> wrote:
>> 
>> On this whole subject of contracts to make wills:  If we have contracts involving property transfers effective at death are we in the world of consideration rather than gifts? If we are in the world of consideration are we talking of potentially taxable events?
>> 
>> On Fri, May 22, 2015 at 11:13 AM, Eric Nelsen <Eric at sayrelawoffices.com> wrote:
>>> Hi Jacob--Karen Boxx stole most of my thunder :-)  My primary concern always is identification and control of the decedent's assets that are supposed to eventually go to the decedent's kids, through an unknown amount of time until the surviving spouse dies. My secondary concern is flexibility for the surviving spouse to accommodate changed circumstances in a way that fairly balances the surviving spouse's interests with that of the decedent's kids.
>>> 
>>>  
>>> 
>>> When we last had a listserve discussion about Will contracts (in the context of mutual Wills), I copied into my files the following comments from others:
>>> 
>>>  
>>> 
>>> Mutual wills are clumsy and the law relating to them is not well developed.  If there's a possibility that one of the spouses might remarry following the first death, consider how the survivor's mutual will would work, in light of the new marriage.  E.g., if surviving wife remarries and doesn't make a new will, upon her death the 2nd husband becomes entitled to that share of the wife's estate as if she had died intestate.  That would blow up any plan envisioned by mutual wills.  Or, suppose wife dies, surviving husband remarries; the new wife then dies and leaves her estate to the husband.  Can surviving husband bequeath any of the assets that he inherited from the 2nd wife to her kids?  Is the surviving spouse precluded from making non probate transfers?  Gifts? 
>>> 
>>>  
>>> 
>>> Just food for thought.  Trusts are more flexible-they can account for all the assets acquired by the couple, without locking in a survivor with respect to assets acquired with a new spouse.
>>> 
>>>  
>>> 
>>> And irrevocable means that it can be problematic for surviving spouse to deal with changes in the circumstances of children, such as the need for a special needs trust for a subsequently disabled child; or other circumstances that require change. I would at least retain the ability to change provisions as to one's own children; since the purpose is (I assume) to prevent the children of deceased spouse from being disinherited.
>>> 
>>>  
>>> 
>>> If for some reason I do conclude that mutual Wills might be the way to go, my starting point is the following draft language, subject of course to editing as I consider the specific circumstances and the priorities of the client:
>>> 
>>>  
>>> 
>>> This Last Will and Testament is executed pursuant to an agreement with the Testator's spouse that (1) they shall execute and maintain mutual Wills that make reciprocal provisions for disposition of property after they both are deceased as set forth in this Last Will and Testament, and that (2) after the death of the first of them, the Last Will and Testament of the survivor shall be irrevocable as to disposition of (a) all property that was community property at the time of the first spouse's death and the rents, issues, profits, and proceeds thereof, and (b) any and all other property received by the survivor from the first spouse to die, whether under the Will or by non-probate transfer or otherwise, and the rents, issues, profits, and proceeds thereof. By executing this Last Will and Testament, the Testator acknowledges the existence of said agreement between the spouses, and intends to be bound thereby.
>>> 
>>>  
>>> 
>>> Have the other spouse sign under this contract language, on the testator's Will, so there is contemporaneous acknowledgment of the contract by both parties.
>>> 
>>>  
>>> 
>>> A major problem I see with this draft language is the rat's nest of asset-tracing that has to be done when the surviving spouse dies. It's a huge opportunity for litigation and a great way to ruin relationships. Thus my preference for segregation via a trust when the first spouse dies; it eliminates the need to trace assets.
>>> 
>>>  
>>> 
>>> Sincerely,
>>> 
>>>  
>>> 
>>> Eric
>>> 
>>>  
>>> 
>>> Eric C. Nelsen
>>> 
>>> SAYRE LAW OFFICES, PLLC
>>> 
>>> 1320 University St
>>> 
>>> Seattle WA  98101-2837
>>> 
>>> phone 206-625-0092
>>> 
>>> fax 206-625-9040
>>> 
>>>  
>>> 
>>>  
>>> 
>>>  
>>> 
>>> From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jacob Menashe
>>> Sent: Friday, May 22, 2015 8:14 AM
>>> 
>>> 
>>> To: WSBA Probate & Trust Listserv
>>> Subject: Re: [WSBAPT] Blended Families & Wills
>>>  
>>> 
>>> Eric, might you be able to elaborate regarding “contracts to maintain a will really don’t work well except in very specific circumstances”?  
>>> 
>>>  
>>> 
>>> Best,
>>> 
>>>  
>>> 
>>> Jacob Menashe
>>> 
>>>  
>>> 
>>> From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
>>> Sent: Thursday, May 21, 2015 10:04 AM
>>> To: WSBA Probate & Trust Listserv
>>> Subject: Re: [WSBAPT] Blended Families & Wills
>>> 
>>>  
>>> 
>>> I agree. Contracts to maintain a Will really don't work well except in very specific circumstances. If surviving spouse is to have use during life but remainder is to decedent's kids from a prior relationship, it's usually easiest to work out the conditions and restrictions in a testamentary trust for decedent's assets.
>>> 
>>>  
>>> 
>>> Sincerely,
>>> 
>>>  
>>> 
>>> Eric
>>> 
>>>  
>>> 
>>> Eric C. Nelsen
>>> 
>>> SAYRE LAW OFFICES, PLLC
>>> 
>>> 1320 University St
>>> 
>>> Seattle WA  98101-2837
>>> 
>>> phone 206-625-0092
>>> 
>>> fax 206-625-9040
>>> 
>>>  
>>> 
>>>  
>>> 
>>>  
>>> 
>>> From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of jeffrey winter
>>> Sent: Thursday, May 21, 2015 9:42 AM
>>> To: WSBA Probate & Trust Listserv
>>> Subject: Re: [WSBAPT] Blended Families & Wills
>>> 
>>>  
>>> 
>>> It's obviously a delicate situation, but I usually recommend a trust to hold the decedent's half, with the residue going to his or her kids after the death of the surviving spouse.
>>> 
>>>  
>>> 
>>> Jeffrey D. Winter
>>> 
>>> Law Office of Jeffrey D. Winter, P.S.
>>> 604 North Main Street
>>> Ellensburg, WA 98926
>>> (509) 925-9600 tel.
>>> (509) 925-9606 fax
>>> 
>>>  
>>> 
>>> From: jim at doranlegal.com
>>> To: wsbapt at lists.wsbarppt.com
>>> Date: Thu, 21 May 2015 09:31:06 -0700
>>> Subject: [WSBAPT] Blended Families & Wills
>>> 
>>> Is a contract between the husband and wife in a blended family situation the best way to deal with the estate plan?  In particular, how do we bind the survivor to NOT change his or her Will  after the first of the spouses dies.
>>> 
>>>  
>>> 
>>> I think I have heard about some sort of contract between the husband and wife that would give the children, as the beneficiaries of the contract, the right to enforce the terms of the contract so that the survivor doesn’t simply change his or her Will and cut out the other children.
>>> 
>>>  
>>> 
>>> What is that contract and are there better ways to deal with this blended family situation?
>>> 
>>>  
>>> 
>>> If you can point me to the right source I will follow the lead.
>>> 
>>>  
>>> 
>>> Thank you. 
>>> 
>>>  
>>> 
>>>  
>>> 
>>> James R. Doran
>>> 
>>> Attorney at Law
>>> 
>>> 100 E. Pine Street – Suite 205
>>> 
>>> Bellingham, WA 98225
>>> 
>>> (360)393-9506
>>> 
>>> jim at doranlegal.com
>>> 
>>> www.doranlegal.com
>>> 
>>>  
>>> 
>>> 
>>> _______________________________________________ WSBAPT mailing list WSBAPT at lists.wsbarppt.com http://mailman.fsr.com/mailman/listinfo/wsbapt
>>> 
>>> 
>>> _______________________________________________
>>> WSBAPT mailing list
>>> WSBAPT at lists.wsbarppt.com
>>> http://mailman.fsr.com/mailman/listinfo/wsbapt
>> 
>> 
>> 
>> -- 
>> Mark T. Higgins
>> Mark T. Higgins, P.C.
>> P.O. Box 57
>> Darrington, WA 98241
>> 206-491-2420
>> _______________________________________________
>> WSBAPT mailing list
>> WSBAPT at lists.wsbarppt.com
>> http://mailman.fsr.com/mailman/listinfo/wsbapt
> _______________________________________________
> WSBAPT mailing list
> WSBAPT at lists.wsbarppt.com
> http://mailman.fsr.com/mailman/listinfo/wsbapt
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150522/0d42f068/attachment.html>