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<div dir="ltr">Interesting point. We could speculate that the will was written when the unified credit was much smaller, and the dramatic increases in the unified credit over the last decade or so threw the will out of kilter. If so, is the inability to
predict the future tax laws a mistake of law or fact? Is it a mistake of law or fact that the testator did not have his estate plan reviewed more often?
<div>If so, perhaps our clients need not update their estate plans as often as we previously thought. And we need not build into our estate plans formulas that adjust for future changes in the unified credit or other aspects of the tax laws.</div>
<div>In this particular example, it would be interesting to know what differences there are in the dispositive provisions of the credit shelter trust and the QTIP trust. (Oftentimes, they are very similar.) Then we would know what the motivation is to fund
one trust and defund the other. And we would know what the tax consequences (and dispositive consequences) might be if the change is allowed or disallowed.</div>
<div>Or is the motivation the acquisition of a second basis step-up at the time of the second death that would not be attained if the funds were not in the QTIP Trust?</div>
<div>Inquiring minds want to know . . . . . <br>
<div>Phil Jones<br>
<br>
<div dir="ltr">Philip N. Jones
<div>Duffy Kekel LLP</div>
<div>Portland, OR</div>
<div>pjones@duffykekel.com</div>
<div>(503) 226-1371</div>
</div>
<div dir="ltr"><br>
<blockquote type="cite">On Jan 18, 2020, at 12:07 AM, John J. Sullivan, Esq. <sullaw@comcast.net> wrote:<br>
<br>
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<p class="MsoNormal">Is it possible that there was a mistake of fact or law involved in the design of the estate plan?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">If so, you might consider the application of RCW 11.96A.125 to reform it to conform with the testator/testatrix intent:<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><a href="https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.125">https://app.leg.wa.gov/RCW/default.aspx?cite=11.96A.125</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Best regards, <o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
<p class="MsoNormal">JOHN J. SULLIVAN, <br>
ATTORNEY<o:p></o:p></p>
<p class="MsoNormal">LYONS | SULLIVAN<br>
10655 NE 4TH STREET, SUITE 704<br>
BELLEVUE, WA 98004<br>
425·451·2400 TEL 425-451-7385 FAX<br>
<a href="http://WWW.DLJSLAW.COM">WWW.DLJSLAW.COM</a><o:p></o:p></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Philip N. Jones<br>
<b>Sent:</b> Friday, January 17, 2020 8:46 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Using TEDRA to divert funds from overfunded credit shelter trust to fund QTIP trust<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal">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. <o:p></o:p></p>
</div>
<div>
<p class="MsoNormal" style="margin-bottom:12.0pt">Phil Jones<o:p></o:p></p>
<div>
<p class="MsoNormal">Philip N. Jones <o:p></o:p></p>
<div>
<p class="MsoNormal">Duffy Kekel LLP<o:p></o:p></p>
</div>
<div>
<p class="MsoNormal">Portland, OR<o:p></o:p></p>
</div>
<div>
<p class="MsoNormal"><a href="mailto:pjones@duffykekel.com">pjones@duffykekel.com</a><o:p></o:p></p>
</div>
<div>
<p class="MsoNormal">(503) 226-1371<o:p></o:p></p>
</div>
</div>
<div>
<p class="MsoNormal"><br>
<br>
<o:p></o:p></p>
<blockquote style="margin-top:5.0pt;margin-bottom:5.0pt">
<p class="MsoNormal" style="margin-bottom:12.0pt">On Jan 17, 2020, at 4:09 PM, Jose L Sanchez <<a href="mailto:jose@joselsanchez.com">jose@joselsanchez.com</a>> wrote:<o:p></o:p></p>
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<div>
<p class="MsoNormal"> <o:p></o:p></p>
<div>
<p class="MsoNormal"><span style="color:black">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?</span> <o:p></o:p></p>
<div>
<p class="MsoNormal"><span style="color:black"><o:p> </o:p></span></p>
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<div>
<p class="MsoNormal"><span style="color:black">Thanks for your feedback.<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="color:#888888"><o:p> </o:p></span></p>
</div>
<div>
<p class="MsoNormal"><span style="color:#888888">Jose L. Sanchez<o:p></o:p></span></p>
</div>
</div>
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