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<p class="MsoNormal">Ronda,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Until a time when section 1014 is changed, I think you will find John’s approach more efficient. As a theoretical exercise I have considered a formula, ordering, triggering approach in the event of full repeal of the Federal estate tax
combined with some type of limited step up. The problem is, to be tax efficient, the calculation would need to consider the tax brackets of the estate & beneficiaries, the adjusted basis of assets at sale & the time value of money for the timing of when the
taxes. While the top capital gains rate (including the investment income tax surcharge) might be 23.8% and the top state estate tax rate is 20%, these are not flat rates. In addition, directing the retirement accounts to the testamentary trust presents its
own tax inefficiency issues. <o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#984806">Sincerely,</span><span style="font-family:"Helvetica",sans-serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#1F497D"> </span><span style="font-family:"Helvetica",sans-serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:14.0pt;font-family:"Helvetica",sans-serif;color:#984806">Derek W. Jensen,
</span><span style="font-family:"Helvetica",sans-serif;color:#984806">JD, LLM<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#984806">Jensen Law Office, PLLC</span><span style="font-family:"Helvetica",sans-serif;color:black"><o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>John J. Sullivan<br>
<b>Sent:</b> Friday, December 29, 2017 11:57 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Stepped-up basis for Credit Shelter Trust with General Power of Appt.<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Ronda and Chris:<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">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. <o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">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?<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">If the estates are taxable for federal purposes too, bifurcate the trusts so the portion that will be QTIP’d is separate?<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">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.<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt">John Sullivan<o:p></o:p></p>
<div id="AppleMailSignature">
<p class="MsoNormal">Sent from my iPhone<o:p></o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><br>
On Dec 29, 2017, at 11:02 AM, Eden Rubenstein Toner <<a href="mailto:attorneytoner@earthlink.net">attorneytoner@earthlink.net</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal"><span style="color:#1F497D">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Eden</span><o:p></o:p></p>
<p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in">Eden Rubenstein Toner</span></i><o:p></o:p></p>
<p class="MsoNormal"><i><span style="font-size:10.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in">Attorney at Law</span></i><o:p></o:p></p>
<p class="MsoNormal"><i><span style="font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in">1600-B SW Dash Point Road, #163</span></i><o:p></o:p></p>
<p class="MsoNormal"><i><span style="font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in">Federal Way, WA 98023</span></i><o:p></o:p></p>
<p class="MsoNormal"><i><span style="font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in">phone 206-953-4485</span></i><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:Andalus;color:black;border:none windowtext 1.0pt;padding:0in"> IMPORTANT: This e-mail message (and any attachments accompanying it) is intended to be confidential, only for the use of the intended
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<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">
</span><a href="mailto:wsbapt-bounces@lists.wsbarppt.com"><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">wsbapt-bounces@lists.wsbarppt.com</span></a><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif"> [</span><a href="mailto:wsbapt-bounces@lists.wsbarppt.com"><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">mailto:wsbapt-bounces@lists.wsbarppt.com</span></a><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">]
<b>On Behalf Of </b>Chris Moore<br>
<b>Sent:</b> Friday, December 29, 2017 10:32 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv<br>
<b>Subject:</b> Re: [WSBAPT] Stepped-up basis for Credit Shelter Trust with General Power of Appt.</span><o:p></o:p></p>
</div>
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<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Thank you for this question. I am interested in any comments as well.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">The only simple way I can see to resolve this problem is for the WA legislature to adopt portability.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Sincerely,</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#3333FF"><br>
</span></b><b><span style="font-size:13.5pt;font-family:"Lucida Handwriting";color:#3333FF">Chris J. Moore</span></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Christopher J. Moore, JD, CPA (Inactive), AEP<sup>®</sup>, EPLS*</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Creason, Moore, Dokken & Geidl, PLLC</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Lawyers</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">1219 Idaho Street, POB 835</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Lewiston, Idaho 83501-0835</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Phone: 208-743-1516; Fax: 208-746-2231</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">Website: </span><a href="http://www.cmd-law.com/" target="_blank"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#1155CC">www.cmd-law.com</span></a><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
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</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">*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.</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#500050">_______________________________________________</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#500050"><br>
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<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> [mailto:<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Ronda Larson<br>
<b>Sent:</b> Thursday, December 28, 2017 4:22 PM<br>
<b>To:</b> <a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBAPT] Stepped-up basis for Credit Shelter Trust with General Power of Appt.<o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Listmates,</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">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. </span>
<o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Thanks.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:20.0pt;font-family:"Brush Script MT"">Ronda Larson</span><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-size:16.0pt;font-family:"Baskerville Old Face",serif;color:black">Larson Law, PLLC</span></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif;color:#767171">1700 Cooper Point Rd SW, Bldg A3</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif;color:#767171">Olympia WA 98502</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif;color:#767171">Ph: 360-259-3076</span><o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:ronda@larsonlawpllc.com"><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif">ronda@larsonlawpllc.com</span></a><o:p></o:p></p>
<p class="MsoNormal"><a href="http://www.larsonlawpllc.com/"><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif">www.larsonlawpllc.com</span></a><span style="font-size:12.0pt;font-family:"Baskerville Old Face",serif">
</span><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal"><b><u><span style="color:#323232">NOTICES</span></u></b><span style="color:#323232">: This message, including attachments, is confidential and may contain information protected by the attorney-client privilege or work product doctrine.
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