[WSBAPT] Stepped-up basis for Credit Shelter Trust with General Power of Appt.

[Chris Moore]

Thank you for this question.  I am interested in any comments as well.



I am assuming your desire for a step-up in basis is for the Washington
Estate Tax credit shelter trust since a CST  is not needed for federal
purposes due to portability.  When I have tried to think of a way to get
stepped up basis on a WA credit shelter trust I have always come back to
the premise that in order to obtain a step-up the assets must pass through
the estate of the decedent.  However, for WA estate tax purposes, if the
assets pass through the survivor’s estate, then, you have defeated the
purpose of the credit shelter trust for WA estate tax purposes.  Perhaps
there are ways to accomplish this, but simplicity will certainly be lost.



The only simple way I can see to resolve this problem is for the WA
legislature to adopt portability.



Sincerely,

*Chris J. Moore*
Christopher J. Moore, JD, CPA (Inactive), AEP®, EPLS*
Creason, Moore, Dokken & Geidl, PLLC
Lawyers
1219 Idaho Street, POB 835
Lewiston, Idaho 83501-0835
Phone: 208-743-1516; Fax: 208-746-2231
Website: www.cmd-law.com

*Certified as an Estate Planning Law Specialist by the Estate Law
Specialist Board, Inc., the only estate planning certification entity
approved by both the American Bar Association and the Idaho State Bar
Association.
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*From:* wsbapt-bounces at lists.wsbarppt.com [mailto:
wsbapt-bounces at lists.wsbarppt.com] *On Behalf Of *Ronda Larson
*Sent:* Thursday, December 28, 2017 4:22 PM
*To:* wsbapt at lists.wsbarppt.com
*Subject:* [WSBAPT] Stepped-up basis for Credit Shelter Trust with General
Power of Appt.



Listmates,



I am seeking feedback from seasoned tax savvy estate planners. Clients are
a blended family but do not have a taxable estate. I would like the clients
to get a step up in basis on property that will be put in a testamentary
credit shelter trust. My plan is to add language giving a formula
testamentary general power of appointment with ordering rules and
non-adverse party consent. Thus, the surviving spouse can appoint to his or
her estate’s creditors (and, I plan to also include power to appoint to the
trustor’s then-living descendants, unless the client says otherwise), but
the power is limited to assets with the greatest appreciation (and excludes
IRA/Retirement plans), and to exercise the power, the spouse must have
consent of a non-adverse party.



In cases where there is a potentially taxable estate, I plan to add a
capping rule, thus limiting the power to appoint to the fraction or
percentage that doesn’t trigger estate taxes.



Is there anything about Washington state law that I am not accounting for
in this scheme? Any other thoughts you have regarding this issue? I just
want to cover my bases by putting it out here for input.



Thanks.



Ronda Larson

*Larson Law, PLLC*

1700 Cooper Point Rd SW, Bldg A3

Olympia WA 98502

Ph: 360-259-3076

ronda at larsonlawpllc.com

www.larsonlawpllc.com



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