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

Fri Dec 29 11:02:26 PST 2017

Ronda—I have not used POA’s extensively, so others may have better info.  But, if you don’t need to protect from estate tax, then you could use a marital trust instead of a credit shelter.  Call me if you’d like to discuss.

Eden

Eden Rubenstein Toner

Attorney at Law

1600-B SW Dash Point Road, #163

Federal Way, WA 98023

phone 206-953-4485

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Chris Moore
Sent: Friday, December 29, 2017 10:32 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Stepped-up basis for Credit Shelter Trust with General Power of Appt.

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:  <http://www.cmd-law.com/> 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 <http://www.larsonlawpllc.com/>  

NOTICES: This message, including attachments, is confidential and may contain information protected by the attorney-client privilege or work product doctrine. If you are not the addressee, any disclosure, copying, distribution, or use of the contents of this message are prohibited. If you have received this email in error, please destroy it and notify me immediately. Any tax advice contained in this message is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the internal revenue code or (2) promoting, marketing, or recommending to others any tax-related matter(s) addressed here.

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