Estate Planning, Probate & Elder Law Attorneys

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» Audrey Niffenegger's Her Fearful Symmetry and Probate

I enjoyed Audrey Niffenegger's first novel, The Time Traveler's Wife. Haven't seen the movie -- looks a little too sappy -- but the book was great.

Right now I'm working on Ms. Niffenegger's newest, entitled Her Fearful Symmetry. I've just started it, but the novel appears to be a riff on the old idea of "stay in a haunted house overnight to get an inheritance." Two American twenty-somethings (twins) get the following letter (which I have edited) from the attorney for their English aunt, who has passed away:

Dear Julia and Valentina Poole,

I regret to inform you of the death of your aunt, Elspeth Alice Noblin.... Last September, knowing that her illness would soon result in her death, she made a new will. I am enclosing a copy of this document. You are her residuary legatees; that is, she has bequeathed you her entire estate, with the exception of a few minor bequests to friends and charities. You will receive this inheritance when you reach the age of twenty-one.

The bequest is given to you with the following conditions:

1) Ms. Noblin owned an apartment in London.... She bequeathed this apartment to you on the condition that you both live in it for one year before you may sell it.

2) The entire bequest is given on the condition that no part of it shall be used to benefit Ms. Noblin's [twin] sister, Edwina, or Edwina's husband, Jack (your parents). Also, Edwina and Jack Poole are forbidden to set foot in the flat or inspect its contents.

Sounds intriguing, doesn't it?

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» 5 Things You Need to Know About the Estate Tax in 2010: #3 (Trust Problems)

An effective estate plan should be flexible enough to accommodate changes in circumstances -- maybe not every change, but many of them. For instance, instead of specifically referencing the estate tax exemption amount when drafted, most well-drafted documents contain a formula based on the exemption amount in effect when the decedent dies. But does your estate plan account for the possibility that there will be NO federal estate tax when you die?

A lot of married couples have what's known as an A-B plan. If one spouse dies, two trusts are created for the survivor:

(A) Family Trust: usually containing an amount equal to the federal estate tax exemption amount at the death of the first to die

(B) Marital Trust: containing everything else owned by the first to die

The goal is no federal estate tax at the death of the first to die. The Family Trust is by definition exempt from federal estate tax, and the Marital Trust qualifies for the marital deduction (so is not subject to federal estate tax). The surviving spouse is the only beneficiary of the Marital Trust; the Family Trust's beneficiaries might be just the surviving spouse, the surviving spouse and kids of first to die, or just the kids of the first to die.

But what happens if there's no estate tax whatsoever? If the above language is used, the Family Trust isn't created (no exemption = no federal estate tax = no Family Trust). So there's just a Marital Trust.

Alternatively, you could draft a trust whereby the Marital Trust contains the "smallest amount that will result in no federal estate tax," and the Family Trust contains everything else. Under that scenario, no Marital Trust is created (the "smallest amount" would be $0). So there's just a Family Trust.

So what's the problem? There may not be one, if we're talking about a traditional nuclear family where the spouse is also the sole beneficiary of the Family Trust. But what if both spouses have children from a prior marriage? In that case, we may have a Family Trust of which the surviving spouse isn't the sole beneficiary (or not a beneficiary at all). And we run the risk, under the above scenarios, of either shortchanging the surviving spouse (no Marital Trust created) or shortchanging the kids (no Family Trust created).