by Rebecca Klock Schroer
We are often asked as trust and estate litigation attorneys for advice on how to avoid future family disputes with better estate planning. I want to highlight an issue that seems to be appearing more frequently in disputes involving family partnerships. When a partner dies, the succession provisions of the partnership agreement can become an issue in litigation when the provisions are not clearly drafted or fail to coordinate with other estate planning documents.
We have had several cases involving whether the decedent’s successors are partners, or simply assignees who do not have all the rights of a partner. Family partnership agreements may allow for the transfer of a partnership interest to another family member automatically. Even in these scenarios, there may be technical terms of the partnership agreement that have to be complied with before the family member officially becomes a partner. Some agreements do not allow anyone to succeed to a partner’s interest unless otherwise determined by the partnership/other partners. Accordingly, if a partner’s will purports to unilaterally pass a partnership interest to a beneficiary, it may cause a dispute if such a transfer is not allowed by the partnership agreement. The dispute is often fueled by a beneficiary who asserts that the will is the best evidence of the decedent’s intent. Read more
by Chelsea May
IRS Revenue Procedure 2017-34, effective as of June 9, 2017, increases the amount of time that a surviving spouse has to file an estate tax return (Form 706) for the purpose of electing portability of the Deceased Spousal Unused Exclusion amount (otherwise known as “DSUE”). The portability election, which was first introduced in 2010 and made permanent under the American Taxpayer Relief Act of 2012, offers a great way for a surviving spouse to preserve the unused estate tax exemption of their deceased spouse. The DSUE amount can then be added to the surviving spouse’s own exemption amount and be used to shelter the surviving spouse’s lifetime gifts and transfers at death from estate taxes.
Prior to June 9, 2017, a portability election was required to be made on a timely filed estate tax return, due to the IRS nine months from the decedent’s date of death, with the availability of an automatic six month extension. The IRS has once before provided some relief from this deadline in Revenue Procedure 2014-18, but that ruling was temporary and provided no relief for the estates of decedents dying after January 1, 2014. The IRS claims to have been flooded with numerous requests for an extension of time to file for the portability election and has issued this new Revenue Procedure to provide a simplified method to obtain the extension to elect portability for a decedent’s estate who has no estate tax filing requirement to the later of (i) January 2, 2018 or (ii) the second anniversary of the decedent’s date of death. Note that the regulation provides that this longer deadline is not available to the estate of a decedent if an estate tax return was timely filed. In such case, the executor either will have elected portability by timely filing the return or will have affirmatively opted out of portability by not making the election. Read more
by Kelly Dickson Cooper
More and more, I review trust agreements that appoint a trustee, but then appoint other individuals or institutions to perform certain tasks that are normally in the domain of the trustee. They are sometimes referred to as trust protectors, trust advisors, trust directors, special powerholders, investment trustees, or distribution trustees. I most often see these appointments in the areas of investments or distributions.
The trust language that attempts to divide the responsibilities of a trustee among a group is often unclear and give rise to difficult questions as to the scope of each individuals’ responsibilities. There is also the question of whether the trustee is responsible for the actions of the other appointees and if the appointees are fiduciaries. These problems with interpretation are often exacerbated because the laws are not clear about the division of these responsibilities and the liability of each actor. Read more