[WSBAPT] Using TEDRA to divert funds from overfunded credit shelter trust to fund QTIP trust

[John J. Sullivan, Esq.]

Is it possible that there was a mistake of fact or law involved in the design of the estate plan?

 

If so, you might consider the application of RCW 11.96A.125 to reform it to conform with the testator/testatrix intent:

 

https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.125

 

Best regards, 

 

JOHN J. SULLIVAN, 
ATTORNEY

LYONS | SULLIVAN
10655 NE 4TH STREET, SUITE 704
BELLEVUE, WA 98004
425·451·2400 TEL 425-451-7385 FAX
WWW.DLJSLAW.COM <http://WWW.DLJSLAW.COM> 

 

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Philip N. Jones
Sent: Friday, January 17, 2020 8:46 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Using TEDRA to divert funds from overfunded credit shelter trust to fund QTIP trust

 

For ethical reasons, we are not allowed to give tax advice based on the likelihood of an item being discovered or challenged on audit.  See, for example, IRS Circular 230.  If the question were whether the WDOR would be successful in raising that issue, the answer would be that the odds of success for the WDOR would be high.  A divergence from the will (even through a binding agreement) requires that it must be based on a bona fide enforceable cause of action, and the remedy must be supported by local law, even if a probate court judge were to approve it.  If those two factors are not present, the result will be ignored for tax purposes.  Lots of rulings and cases support those two requirements. Neither of those factors appear to be present under these facts.  

Phil Jones

Philip N. Jones 

Duffy Kekel LLP

Portland, OR

pjones at duffykekel.com <mailto:pjones at duffykekel.com> 

(503) 226-1371





On Jan 17, 2020, at 4:09 PM, Jose L Sanchez <jose at joselsanchez.com <mailto:jose at joselsanchez.com> > wrote:

 

An estate with $6M has all of the funds going to a credit shelter trust and no funds going to the marital QTIP trust. How likely is the WA DOR to challenge a nonjudicial binding agreement that funds the marital deduction QTIP trust instead of the credit shelter trust? 

 

Thanks for your feedback.

 

Jose L. Sanchez

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