South Carolina Trust
and Estate Law Blog

Lately I have found myself fascinated by the recent repeal of the federal estate tax and all of its consequences, intended or otherwise. Equally fascinating are the proposals that have been made by members of Congress to reinstate the estate tax.

One such proposal is to ressurect the estate tax for 2010 at 2009 levels, and to make the federal estate tax exemption portable between spouses. This is an interesting proposal in that theoretically this would eliminate the need for a credit shelter trust to accomplish estate tax planning for a married couple. In a typical planning scenario, the credit shelter trust is funded by assets owned by the first-to-die spouse and is funded up to the exemption amount, and all other assets are placed into a qualified terminable interest property (QTIP) trust for the sole benefit of the surviving spouse. This is done because if all the assets of the first-to-die spouse are transferred to the surviving spouse, the first-to-die spouse’s exemption amount is totally wasted, and a much larger estate tax becomes due at the end of the surviving spouse’s lifetime.     

The portability of the exemption would allow whatever exemption amount that is unused in the first-to-die spouse’s estate to be transferred to the surviving spouse’s estate.  Wouldn’t that be great? The proponents of portability say that this would eliminate the need for the credit shelter trust, thus reducing complexity and the financial burden of estate planning. Good intentions of course, but where again does that road paved with good intentions lead?

Experienced estate planners can instantly recognize the complexities that exemption portability would create.  Number one, what about multiple marriages? (Click here for more…)

In McDaniel v. Kendrick, Op. No. 4643 (S.C. Ct. App. filed December 31, 2009), the South Carolina Court of Appeals decided a real estate dispute with a tangential relationship to estate planning. Oftentimes, a mom or dad will decide as part of their estate planning to transfer a home to a child as a gift, with the expectation that the parent would continue to reside in the home for the rest otheir lives. This might be done for medicaid qualification purposes (assuming medicaid is not expected to be necessary for at least five years), or estate tax purposes. What happens however is the relationship between parent and child or parent and spouse of child deteriorates, and the parent is evicted from the home.

There is an equitable legal doctrine known as a constructive trust that could come to the parent’s rescue in the above situation. While the McDaniel case did not concern a home transfer for the purpose of estate planning, it involved (Click here for more…)

First installment of Do-it-Yourself estate planning disasters.  Client X has three children named High, Dry, and Helpful, and no surviving spouse. Helpful is so named because she is so very helpful in caring for mom.

So helpful in fact, that Helpful moved in with mother a few years before mom’s death to take care of her, oh, and she (Click here for more…)

Here’s a new blog category.  I am going to attempt to collect examples of Do-It-Yourself estate plans that have led to disastrous results. I think that the internet age has led to a boom for do-it-yourselfers in many fields, and this of course includes estate planning. With Google and Legal Zoom at your finger tips, what could possibly go wrong? My guess would be inadvertantly disinheriting loved ones and astronomical litigation fees, but let’s see if we can find out for sure. Stay tuned.  

If you have read any of my previous posts, surely you know that there is no federal estate tax in the year 2010.  Unsurprisingly, this change in the law can have severe repercussions for your estate plan.

Some estate planners are sounding the alarm with regard to estate plans based on credit shelter family trusts and marital deduction trusts.  These trusts are set up in such a way that the credit shelter trust gets funded with assets up to the amount that will not be subject to estate tax due to the previously existing estate tax exemption, while the marital deduction trust gets everything else.  (This set up eliminates all federal estate tax when the first spouse passes away.)

The problem with this set up is that (Click here for more…)