[WSBAPT] wrongfully excluded heir
Felicia Value
felicia at skagitprobate.com
Thu Jan 10 11:38:34 PST 2019
Dang y'all. Phil just dropped the mic.
On 1/10/2019 11:04 AM, Philip N. Jones wrote:
>
> An assignment would be a taxable gift, but (as has been noted) a gift
> is not really taxable unless the donor has enough assets to be subject
> to the federal estate tax. But watch out for a
> spendthrift/nonassignment clause. Which leads us to TEDRA.
>
> A transfer pursuant to a TEDRA would also be a gift unless is it
> backed up by a bona fide enforceable cause of action.If a bona fide
> dispute exists between the beneficiaries, and the agreement is
> intended to resolve that dispute, then the resulting transfer will not
> constitute a gift, but instead will constitute a settlement in
> satisfaction of the dispute. In such a situation, the agreement
> should recite the nature of the dispute and the fact that the altered
> division of the property is intended to resolve that dispute. For
> somewhat greater certainty that the result will be honored by the IRS,
> the aggrieved beneficiary should first file a will contest, a petition
> for instructions, an objection to the final account, or some other
> appropriate pleading to lend greater credence to the notion that a
> bona fide dispute exists. However, neither the IRS nor the courts
> will respect a settlement based on “friendly” litigation where no bona
> fide dispute is present. For example, in /Grossman v. Campbell/, 368
> F.2d 206, 18 AFTR2d 6251 (5^th Cir. 1966), the court held that a
> settlement agreement had been reached in a situation where no real
> dispute existed, and thus the settlement would be ignored for estate
> tax purposes. The Ninth Circuit reached a similar result in
> /Commissioner v. Vease/, 314 F.2d 79, 11 AFTR2d 1800 (9^th Cir. 1963),
> rev’g. 35 T.C. 1184 (1961). In that case, the court concluded that a
> settlement agreement had not resulted from a bona fide will contest,
> but instead had resulted from “nothing more than a voluntary
> rearrangement of property interests acquired under an admittedly valid
> will.” See also /Wolfsen v. Smyth,/ 223 F.2d 111 (9^th Cir. 1955);
> /Bath v. Commissioner/, T.C. Memo 1975-102. Other examples of
> settlements or trust modifications that were disregarded for tax
> purposes include /Aronson v. Commissioner/, T.C. Memo 2003-189;
> /Brandon v. Commissioner/, 86 T.C. 327 (1986), rev’d on other grounds,
> 828 F.2d 493 (8^th Cir. 1987), on remand 91 T.C. 829 (1988); /Simpson
> v. Commissioner/, T.C. Memo 1994-259; /Crown Income Charitable Fund v.
> Commissioner, 8 F.3d 571 /(7^th Cir. 1993); /La Meres v.
> Commissioner/, 98 T.C. 294 (1992); CCA 201651013; see also Rev. Rul.
> 89-31, 1989-1 C.B. 277.
>
> Phil Jones
>
> Portland, OR
>
> *From:*wsbapt-bounces at lists.wsbarppt.com
> [mailto:wsbapt-bounces at lists.wsbarppt.com] *On Behalf Of *Christopher Sm
> *Sent:* Thursday, January 10, 2019 10:44 AM
> *To:* WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> *Subject:* Re: [WSBAPT] wrongfully excluded heir
>
> Could you do a partial assignment of interest? Or is that treated as a
> gift?
>
> Cheers,
>
> Christopher Small
>
> CMS Law Firm LLC <http://cmslawfirm.com>
>
> 150 Lake St. S., Suite 218
>
> Kirkland, WA 98033
>
> 206.659.1512
>
> Legal stuff I have to put in... /To ensure compliance with Treasury
> Department and IRS regulations, we inform you that, unless expressly
> indicated otherwise, any federal tax advice contained in this
> communication (including any attachments) is not intended or written
> by CMS Law Firm LLC to be used, and cannot be used by the taxpayer,
> for the purpose of: (i) avoiding penalties that may be imposed on the
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>
> On Thu, Jan 10, 2019 at 10:42 AM Eric Nelsen <Eric at sayrelawoffices.com
> <mailto:Eric at sayrelawoffices.com>> wrote:
>
> Lots of tax implications if it's done by any method other than
> inheritance. I have done the heirs-gift-to-excluded-child method
> but only where the individual gifts were below the federal annual
> gift exclusion limit (currently $15,000, but lower back when I did
> this in a case).
>
> I think best bet on your facts, assuming there isn't a fact
> problem I don't know about, is a TEDRA Agreement executed by all
> heirs, indicating that the Will should be reformed because its
> provision concerning the excluded sibling is in dispute, that
> everyone agrees that the true intent of the testator was to
> provide equal benefit to all children, that the testator made a
> mistake of fact in excluding the sibling (not realizing that the
> expected benefit was not received or was not certain to be
> received), and that but for that mistake, the testator would have
> included all children as equal heirs. And therefore, the heirs all
> agree that the Estate should be split in equal shares. That way
> everyone gets the distribution as inheritance and the tax
> implications go away.
>
> Sincerely,
>
> Eric
>
> Eric C. Nelsen
>
> SAYRE LAW OFFICES, PLLC
>
> 1417 31st Ave South
>
> Seattle WA 98144-3909
>
> phone 206-625-0092
>
> fax 206-625-9040
>
> *From:*wsbapt-bounces at lists.wsbarppt.com
> <mailto:wsbapt-bounces at lists.wsbarppt.com>[mailto:wsbapt-bounces at lists.wsbarppt.com
> <mailto:wsbapt-bounces at lists.wsbarppt.com>] *On Behalf Of *Allen
> Draher
> *Sent:* Thursday, January 10, 2019 10:14 AM
> *To:* WSBA Probate & Trust Listserv
> *Subject:* [WSBAPT] wrongfully excluded heir
>
> I’m meeting with a potential client. She is the named PR in
> parent’s will. Estate passes to all but one sibling. This
> sibling was excluded because of some benefit to be received that
> wasn’t and all other siblings want to divide estate among all
> siblings. Each share will be several hundred thousand dollars, but
> estate will be under WA State Estate Tax limit. I suppose each
> sibling could gift to the excluded sibling and file Federal Gift
> Tax Returns. With the current federal exclusion amounts not
> likely to be an issue using some of the existing credit, but who
> knows what the future will bring. Has anyone a more creative
> solution they’ve used? Have excluded sibling file a creditor’s
> claim that is approved by the PR with non-intervention powers? (I
> would have other siblings consent in writing). TEDRA? Thank you.
>
> *Allen Draher*
>
> **
>
> *Law Office of Allen Draher, PLLC*
>
> *5426 California Ave. S.W.*
>
> *Seattle, WA 98136*
>
> **
>
> *ph 206-935-2998*
>
> *allen at draherlaw.com* <mailto:allen at draherlaw.com>
>
> **
>
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--
Felicia Value
Attorney at Law
PO Box 578/116 N. Third
La Conner, WA 98257
(360) 466-2088
Felicia at skagitprobate.com
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