Wealth Preservation, Trusts and Estates

In our practice we have the experiences representing Executors  that are necessary to help present clients avoid future problems occurring after death.  Everyone wants and expects that their wishes as set out in their  Last Will will be followed and will be properly carried out.  In some cases, clients want to divide their estate in a way that might not follow the traditional “family line.”

As a result, we know that this might not sit well with all of the beneficiaries when the time comes to divide the estate.  Those beneficiaries might be so upset or might have such a substantial economic stake that they might consider contesting the will.  A Will contest  will likely be very expensive and time consuming.  We should take steps now to avoid that future possibility.

There are a number of things that can be done to head off potential will contests.  One such measure is to actually address the issue now with those who will be impacted.  This is a surprisingly novel idea.  Many people are reluctant to talk about their Wills with their children or loved ones, especially with those who might be negatively impacted by the Will contents.

However, giving the impacted beneficiary or beneficiaries notice of the intentions in advance of death, you can pre-address the common arguments made by those contesting wills.  Common bases of will contests are lack of capacity or undue influence.  If you address and defeat these and other arguments now, you can virtually eliminate the will contest option for the omitted or affected beneficiary.  This is not to say other options such as the Interrorum Clause  should not be utilized, but this might be a practical solution to a forseeable problem.

If you would like to review potential will contest issues or other planning concerns, please call or contact Douglas L. Kaune at 610-933 8069 or dkaune@utbf.com.

Douglas is a partner with Unruh, Turner, Burke & Frees, P.C. having three convenient locations in Phoenixville, Malvern and West Chester, Pennsylvania (PA) serving clients in Chester, Montgomery, Delaware, Bucks, Berks, Lehigh and Philadelphia Counties.

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The Grantor Retained Annuity Trust (GRAT) has

Douglas L. Kaune

been an excellent and widely used federal estate tax savings tool.  However, President Obama took aim at the GRAT in his 2011 budget proposals.  Additionally, the House has included provisions targeting short-term and rolling GRAT planning tools in legislation that has passed at that level.  Although that particular House legislation has not made it through Senate, there is a significant amount of discussion and proposed legislation in the Senate that would require a GRAT to be for a term no less than 10 years.  This would not eliminate the GRAT as a planning tool, but would curb its use.   Read this recent Forbes article that outlines how the GRAT is used, how it is being attacked and how it will be used into the future.

Keep in mind that it is likely that the Federal Estate Tax will return in 2011 and we will need every resource available to help limit what could be a tax in excess of 45% for every dollar over $1,000,000 in an estate.  We encourage all clients and friends to keep their out for the final legislation of the federal estate tax system and to be ready to update estate plans accordingly.

Doug is a Partner with Unruh, Turner, Burke & Frees, P.C. which is a full service law firm with offices located in Malvern, Phoenixville and West Chester, PA. Doug can be reached at 610 933 8069 or at dkaune@utbf.com. The Law Practice serves Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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Future Federal Estate Tax System: Still Looking For Answers for 2011
By: Douglas L. Kaune, Esquire
Estate planning attorneys and their clients would like to know what the future of the federal estate tax system holds for them.  As many know, we are in uncharted territory with no federal estate tax in 2010, with an ominous return of the tax system slated for 2011. The return of the “Death Tax” as the law is written now woould see the tax applying for every dollar over $1 million in a decedent’s estate.  The top marginal rate of 55% in 2011 would make for a hefty tax bill in many estates. 

There is speculation that Congress will swoop in at the end of the year to modify the federal estate tax law to increase the credit amount and/or lower the top marginal rates.  Unfortunately, there is no way to tell what changes, if any, will be imposed by Congress.  After all, this is the same Congress that allowed the tax to lapse at the end of 2009 and has forced us to drive blind for the first 7 months of 2010.  Read this mid year CNN Money article for some additional insight by clicking this link.

Many clients are taking affirmative action in preparation for the likely return of the federal estate tax.  Others are readying for end of the year 2010 with planning and documents to be signed into effect once they have a better idea of how the federal estate tax issues will play out in Congress.  Some might even consider taking advantage of moderately lower gift tax rates of 35% for every dollar gifted in excess of $1 million In 2010. By paying the gift tax at 35% these clients might avoid a tax on these same dollars at the highest federal estate and gift tax rate of 55% in 2011. Regardless of your decision regarding planning now, you should be very careful to watch how the federal estate tax law progresses.

Douglas L. Kaune, Esq. is a partner with the law firm of Unruh, Turner, Burke & Frees, P.C. which is a full service law firm. You can call Doug at 610 933 8069 or email him at dkaune@utbf.com.
Offices located in Malvern, Phoenixville, West Chester and also serving surrounding locations such as King of Prussia, Media, Norristown, Paoli, and other towns in Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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