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

[John J. Sullivan]

Ronda and Chris:

I’m not completely clear what Ronda’s client’s full intent is. With a blended family usually control is an issue, but Ronda is suggesting a general power of appointment. 

If one goal is a second step up in basis, why not set up the testamentary trust(s) for a QTIP election for federal purposes only? Especially with the federal threshold at $11.2 million each starting next week?

If the estates are taxable for federal purposes too, bifurcate the trusts so the portion that will be QTIP’d is separate?

That way the first decedent can control ultimate disposition as much as s/he wants while maximizing the second step up and minimizing the estate tax hit.

John Sullivan

Sent from my iPhone

> On Dec 29, 2017, at 11:02 AM, Eden Rubenstein Toner <attorneytoner at earthlink.net> wrote:
> 
> 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
>      IMPORTANT: This e-mail message (and any attachments accompanying it) is intended to be confidential, only for the use of the intended recipient(s). If you are not the intended recipient, or if this message has been addressed to you in error, please notify me by reply e-mail, and then destroy all copies of the message and its attachments, if any. Your cooperation is greatly appreciated.  My email is not encrypted;  if you have sensitive information to transmit, please contact me before sending.
>  
>  
> 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: 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.
> _______________________________________________
> -- Note -- The information contained in this e-mail transmission is confidential and may also be a legally privileged communication. This information is intended for the exclusive and private use of the addressee(s). If you are not the intended recipient, you are hereby notified that any use, disclosure, dissemination, distribution (other than to the addressee(s)), copying or taking any action because of this information is strictly prohibited. If you have received this e-mail in error, please notify the sender immediately. Thank you.
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>  
>  
> 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
>  
> 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.
>  
> _______________________________________________
> 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/20171229/d1bd44cf/attachment.html>