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    <p>Dang y'all.  Phil just dropped the mic.</p>
    <div class="moz-cite-prefix">On 1/10/2019 11:04 AM, Philip N. Jones
      wrote:<br>
    </div>
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        <p class="MsoNormal">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.<o:p></o:p></p>
        <p class="MsoNormal">A transfer pursuant to a TEDRA would also
          be a gift unless is it backed up by a bona fide enforceable
          cause of action.<span
            style="font-size:11.0pt;font-family:"Calibri",sans-serif"> 
          </span>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
          <i>Grossman v. Campbell</i>, 368 F.2d 206, 18 AFTR2d 6251 (5<sup>th</sup>
          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 <i>Commissioner
            v. Vease</i>, 314 F.2d 79, 11 AFTR2d 1800 (9<sup>th</sup>
          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
          <i>Wolfsen v. Smyth,</i> 223 F.2d 111 (9<sup>th</sup> Cir.
          1955); <i>Bath v. Commissioner</i>, T.C. Memo 1975-102. 
          Other examples of settlements or trust modifications that were
          disregarded for tax purposes include
          <i>Aronson v. Commissioner</i>, T.C. Memo 2003-189; <i>Brandon
            v. Commissioner</i>, 86 T.C. 327 (1986), rev’d on other
          grounds, 828 F.2d 493 (8<sup>th</sup> Cir. 1987), on remand 91
          T.C. 829 (1988);
          <i>Simpson v. Commissioner</i>, T.C. Memo 1994-259; <i>Crown
            Income Charitable Fund v. Commissioner, 8 F.3d 571
          </i>(7<sup>th</sup> Cir. 1993); <i>La Meres v. Commissioner</i>,
          98 T.C. 294 (1992); CCA 201651013; see also Rev. Rul. 89-31,
          1989-1 C.B. 277.<o:p></o:p></p>
        <p class="MsoNormal"><o:p> </o:p></p>
        <p class="MsoNormal">Phil Jones<o:p></o:p></p>
        <p class="MsoNormal">Portland, OR<span
style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:#1F497D"><o:p></o:p></span></p>
        <p class="MsoNormal"><span
style="font-size:11.0pt;font-family:"Calibri",sans-serif;color:#1F497D"><o:p> </o:p></span></p>
        <p class="MsoNormal"><b><span
              style="font-size:11.0pt;font-family:"Calibri",sans-serif">From:</span></b><span
style="font-size:11.0pt;font-family:"Calibri",sans-serif">
            <a class="moz-txt-link-abbreviated" href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>
            [<a class="moz-txt-link-freetext" href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>]
            <b>On Behalf Of </b>Christopher Sm<br>
            <b>Sent:</b> Thursday, January 10, 2019 10:44 AM<br>
            <b>To:</b> WSBA Probate & Trust Listserv
            <a class="moz-txt-link-rfc2396E" href="mailto:wsbapt@lists.wsbarppt.com"><wsbapt@lists.wsbarppt.com></a><br>
            <b>Subject:</b> Re: [WSBAPT] wrongfully excluded heir<o:p></o:p></span></p>
        <p class="MsoNormal"><o:p> </o:p></p>
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          <div>
            <p class="MsoNormal">Could you do a partial assignment of
              interest? Or is that treated as a gift?<o:p></o:p></p>
          </div>
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            <p class="MsoNormal"><o:p> </o:p></p>
          </div>
          <div>
            <p class="MsoNormal">Cheers,<o:p></o:p></p>
          </div>
          <div>
            <p class="MsoNormal"><o:p> </o:p></p>
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                                    <p class="MsoNormal">Christopher
                                      Small<o:p></o:p></p>
                                  </div>
                                </div>
                                <div>
                                  <p class="MsoNormal"><a
                                      href="http://cmslawfirm.com"
                                      target="_blank"
                                      moz-do-not-send="true">CMS Law
                                      Firm LLC</a><o:p></o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal">150 Lake St. S.,
                                    Suite 218<o:p></o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal">Kirkland, WA
                                    98033<o:p></o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal">206.659.1512<o:p></o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal"><o:p> </o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal"><o:p> </o:p></p>
                                </div>
                                <div>
                                  <p class="MsoNormal">Legal stuff I
                                    have to put in... <i>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 taxpayer under the
                                      Internal Revenue Code; or (ii)
                                      promoting, marketing, or
                                      recommending to another party any
                                      transaction or matter addressed
                                      herein (or any attachments).</i><o:p></o:p></p>
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            <p class="MsoNormal"><o:p> </o:p></p>
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        </div>
        <p class="MsoNormal"><o:p> </o:p></p>
        <div>
          <div>
            <p class="MsoNormal">On Thu, Jan 10, 2019 at 10:42 AM Eric
              Nelsen <<a href="mailto:Eric@sayrelawoffices.com"
                moz-do-not-send="true">Eric@sayrelawoffices.com</a>>
              wrote:<o:p></o:p></p>
          </div>
          <blockquote style="border:none;border-left:solid #CCCCCC
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                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="color:#1F497D">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).</span><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="color:#1F497D"> </span><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="color:#1F497D">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.</span><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="color:#1F497D"> </span><o:p></o:p></p>
                <div>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">Sincerely,</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D"> </span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">Eric</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D"> </span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">Eric C. Nelsen</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">SAYRE LAW OFFICES, PLLC</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">1417 31st Ave South</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">Seattle WA  98144-3909</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">phone 206-625-0092</span><o:p></o:p></p>
                  <p class="MsoNormal"
                    style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                      style="color:#1F497D">fax 206-625-9040</span><o:p></o:p></p>
                </div>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="color:#1F497D"> </span><o:p></o:p></p>
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                    <p class="MsoNormal"
                      style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><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"
                        target="_blank" moz-do-not-send="true"><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">
                        [mailto:</span><a
                        href="mailto:wsbapt-bounces@lists.wsbarppt.com"
                        target="_blank" moz-do-not-send="true"><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">]
                        <b>On Behalf Of </b>Allen Draher<br>
                        <b>Sent:</b> Thursday, January 10, 2019 10:14 AM<br>
                        <b>To:</b> WSBA Probate & Trust Listserv<br>
                        <b>Subject:</b> [WSBAPT] wrongfully excluded
                        heir</span><o:p></o:p></p>
                  </div>
                </div>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">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. 
                  <o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>Allen
                    Draher</b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b> </b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>Law
                    Office of Allen Draher, PLLC</b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>5426
                    California Ave. S.W.</b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>Seattle,
                    WA 98136</b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b> </b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>ph  
                    206-935-2998</b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><a
                    href="mailto:allen@draherlaw.com" target="_blank"
                    moz-do-not-send="true"><b>allen@draherlaw.com</b></a><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b> </b><o:p></o:p></p>
                <p class="MsoNormal"
                  style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span
                    style="font-size:10.5pt;font-family:Consolas">__________________________________________________________</span><o:p></o:p></p>
                <p class="MsoNormal"
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      <pre class="moz-quote-pre" wrap="">_______________________________________________
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    <pre class="moz-signature" cols="72">-- 
Felicia Value
Attorney at Law
PO Box 578/116 N. Third
La Conner,  WA 98257
(360) 466-2088
<a class="moz-txt-link-abbreviated" href="mailto:Felicia@skagitprobate.com">Felicia@skagitprobate.com</a></pre>
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