A remedy for estate tax problem?

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I received an email today about Senate Bill 670, stating that the Elder Law Section of the Wisconsin Bar Association is joining the RPPT Section in support in principle of this bill relating to disposal of a decedent’s property.

The Elder Law Section works to develop and improve laws that affect the elderly, and promotes high standards of ethical performance and technical expertise for those who practice in the area. RPPT pertains to the law of real property, probate and trusts. They support this bill as a remedy for problems experienced by families with estate planning gone awry because of the repeal of the federal estate tax in 2010.

Congressional inaction has resulted in a great deal of uncertainty as to the application of thousands of Wisconsin estate plans (and millions nation-wide) which were premised on, and designed around, the existence of such a tax. Many other states have taken, or are considering, legislative solutions to resolve the issues created in testamentary plans.

The primary issue is that for decades, estate planning attorneys and other planning solutions have utilized formula clauses when creating estates plans or trusts. These formula clauses determine the distribution of assets in an estate or trust while accounting for taxation of such estates or trusts. With no federal estate tax in 2010, there can be (1) significant ambiguity in the interpretation and implementation of these formulas; and (2) the inadvertent disinheritance of children, spouses and charities.

Wisconsin law has long provided that the intentions of a deceased person regarding the disposition of assets are to be respected. Plus, greater certainty in the application of estate planning instruments is in the public interest. SB 670 will further longstanding public policy, reduce protracted litigation and court proceedings, and minimize family and financial dislocations because it says estate planning instruments are to be administered in a manner that is most likely consistent with a deceased person’s expectations and intent.

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