Wills and Trusts

Wyatt, Tarrant & Combs, LLP


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Trust Reformation to Change Dispositive Provisions

In re Trust D Created Under the Last Will and Testament of Darby, 234 P.3d 793 (Kan. 2010).  In 1986, Darby executed his last will and testament, which established several trusts for the benefit of his siblings.  The trust at issue, Trust D, was to be established at Darby’s death by a specific bequest of $240,000 to the trustee.  The trustee was to pay $12,000 each year to Darby’s daughter Marjorie.  Upon Marjorie’s death, the funds in Trust D  were to be paid annually to Marjorie’s three daughters for their lives.  The bequest to Trust D and the annual payments to Marjorie’s daughters were subsequently increased by a codicil to Darby’s will.

After Darby’s death, Marjorie sought to have the trust modified to increase her payments and to achieve Darby’s alleged tax objectives regarding the trust.  All of the beneficiaries consented to the modifications, which the district court approved pursuant to K.S.A. § 58a-411.

The sole question on appeal was whether Kansas law supported the trust modification.  Marjorie argued that such modifications were necessary to provide her basic living expenses and that Darby’s intent was Continue reading


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Estate and Gift Tax – 2014 Update

What a difference a year makes. As we move deeper into 2014, we finally have some certainty in the Federal Estate Tax law.  The largest exemptions in history are in place and are here to stay.

There is a current trend among states to get rid of their own state death tax.  For instance, Tennessee is doing just that.  Tennesseans are in a period of transition.  On May 1, 2012, Tennessee retroactively repealed the Tennessee Gift Tax effective January 1, 2012 and Tennessee is phasing out the Ten­nessee Inheritance Tax through 2016. However, the Tennessee exemption will be a moving target between now and 2016.

Likewise, Indiana repealed its inheritance tax for those dying after December 31, 2012.

Kentucky does currently have an inheritance tax, but it does not have such broad effect.  This is true because there is an exemption (no tax) for amounts passing to the surviving spouse, parents, children, grandchildren, siblings and half-siblings.  As you get farther away in relation, a small exemption Continue reading


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Gift and Gift Taxes – Facts vs. Fiction

Few topics generate as many questions as the subject of gifts and gift taxes. Perhaps the reason lies in the tendency to treat the subject either far too casually or to examine obscure issues having little interest to the client. In this article we will attempt to review the rules applicable to gifts and gift taxes as they apply to you.

When is a Gift a Gift?

The first problem in dealing with gifts is to determine when you have actually made a gift. The elements of a gift are simple.

Intent to make a gift.

Delivery of the gifted property to the donee.

Acceptance of the gifted property by the donee.

Intent

Intent to make a gift seems obvious.  Either you intend to make a gift or you do not. The subjective intent of the donor does not count. It is not that simple. Many gifts are made without the realization that Continue reading


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Life Insurance – Perhaps More than You Want to Know

Life insurance is an integral part of most estate plans. For young adults, life insurance is principally purchased to replace lost earnings. When children are young, life insurance offers the surviving spouse options. No discussion with a surviving spouse is more difficult than the one which brings home the reality that not only have you lost a spouse, but you will likely lose the standard of living to which the family has become accustomed. Young families do not have the financial resources following the death of a parent to provide the children with the educational and developmental opportunities that were available during the lifetime of the parent. Explaining to a wife following the death of her husband that she must change her standard of living or re-enter the work force in order to provide for herself and her children adds additional pain to that produced by the death of the husband.

As the children age, the need for life insurance may diminish, especially if the family is able to accumulate assets for retirement. However, in some cases, the need for life insurance after the children are grown becomes even more crucial.

Consider the case of the family who has accumulated substantial wealth and is looking at substantial death tax liabilities even after Continue reading


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Living Wills and Medical Directives

No subject is more controversial than the issue of providing artificial life support for a terminally ill patient. The conflict between the duty of the medical profession to protect and support life and the reality that medical science can now almost indefinitely maintain the body in an artificial state has few answers. The emotional strain placed on the family of a terminally ill patient to determine if and when to “pull the plug” only adds to the trauma and anguish faced by the family in this time of crisis.

The financial burden placed on the family who elects to continue medical care when there is no realistic hope of survival will remain long after the machines are removed and the patient dies. Few family members are Continue reading


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Increased Federal Exemption Allows for Gifting Opportunities

Under the tax act which passed in December of 2010, the federal estate tax exemption was set at $5 million* per client ($10 million for a husband and wife).  Unlike the prior law, the exemption is structured to allow utilization of the entire exemption during life or at death.  For instance, if no taxable gifts are made during life; there is a $5 million exemption at death.  Likewise, a $3 million gift can be made during life without gift tax, leaving a $2 million exemption to be used at death.

Some practitioners are concerned that Congress, under pressure to address deficits, may roll back the $5 million exemption.  It is impossible to know what Congress will do.  Regardless, for high net worth clients, using the $5 million exemption today rather than Continue reading


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Asset Protection Trusts Come to Tennessee

Let’s face it.  We live in an increasingly litigious society.  For proof of this, just watch television for a few minutes and count how many advertisements you see for lawyers wanting you to sue someone. As a result of this, a question commonly asked of us is, “Can I protect my assets from lawsuits or creditors?” In Tennessee, the answer now appears to be yes.

The Tennessee Investment Services Act of 2007 allows a person to create a trust for the benefit of himself which is also protected from his creditors.  The trust can also be structured to Continue reading