telling the grieving widow that her son-in-law was going to be in charge of her dead husbandâs considerable estate? âI think weâre with you. Whatâs the exemption amount?â
âThatâs the funny part,â Lang said, but you could tell he didnât think it was funny at all. There was a layer of sweat across his upper lip. âUnder theâ¦â he put on his reading glasses and looked down at the document on his desk as if it was crucial to get this information exactly right. The glasses probably had plain glass in them. Iâll bet he just used them to look lawyerly⦠âEconomic Growth and Tax Relief Reconciliation Act, the estate tax was repealed completely. In other words, this year there is no exemption amount. Any amount can be transferred to anyone tax-free.â
I was all over this. I felt like one of the gunners who used to raise their hand and answer every professorâs question back in law school. âSo thereâs no exemption to worry about, and all of the money would go into the marital trust.â
Lang winced a little and gritted his teeth, like he was about to receive a shot from his doctor or down a particularly nasty shot of whiskey. âThatâs what you might expect to happen, Bob, but itâs actually the opposite. In any other year, the marital trust would get the vast majority of the assets, but this yearâ¦â
âBecause thereâs no estate tax,â I interrupted, âSamâs entire estate goes in the family trust.â
âThat is correct, Bob,â Lang said. âSo as trustee, you, not Joan, will be in charge of all of Samâs money.â
***
âI donât understand,â Joan said. âWhatâs the difference? Everythingâs in a trust either way, right?â
Lang got lawyerly again. âIn a basic sense, the two trusts are very similar. Joan is the beneficiary during her lifetime and Sarah is the beneficiary upon Joanâs death. But as a practical matter, the trusts are very different for the beneficiary. In the marital trust, itâs all essentially Joanâs money to do with as she pleases. She could request that every penny be distributed immediately and that request would be granted.â
âBut you just told us none of the estate was going in that trust,â I said. âWhy are we talking about the trust provisions of an empty trust?â
âI want everyone to understand the thinking that went into this. If Sam had died in any other year, Joan would have complete access to the vast majority of the assets in the estate.â
I was beginning to understand. âSo, ironically, because Sam died in a year with no estate tax, Joan will have limited access to her own money in order to avoid paying estate tax.â
âI donât know if itâs âironic,â but the substance of what you said is correct.â Ironically, no one really knows what âironicâ means.
âMaybe itâs not ironic, but what are the odds of Sam dying right before his estate was essentially going to be cut in half by the government?â
âItâs not that unusual,â Lang said. âThere are reports of sick and elderly people who essentially willed themselves to die before the end of the year so their families would get all of the money they accumulated.â
âOr got smothered with a pillow by those families.â It just popped out. I looked at Sarah and Joan. âBut certainly not this family.â Iâm sure some greedy adult children tried to beat the end of the year deadline by tripping over momâs ventilator cord, but in our case it would have been absurd to think saving some taxes would be a net financial benefit to the family, compared to having Sam still in charge.
Lang jumped in quickly. âNo one is suggesting anything like that. It was just a coincidence.â
âRight,â I said. âSo we know
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