15.4 Marital Deduction Planning with Disclaimer Trust

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

15.4 Marital Deduction Planning with Disclaimer Trust

With the disclaimer trust approach, each spouse gives to the survivor the estate outright. The marital deduction eliminates all estate taxes. The combined exclusion amounts eliminate all estate taxes at the second death. (This is due to portability, which is discussed at 7.3.) There is a cost-basis increase for all estate assets at the second death resulting in the best income tax result. If it appears at the first death that asset values may exceed the combined exclusion amount, the survivor can disclaim sufficient assets to eliminate this possibility. The disclaimed assets pass into trust for the surviving spouse, who gets the use of the assets, but those assets are not taxable assets in the survivor's estate. The following form uses a testamentary trust rather than a separate inter vivos trust. The approach is up to the lawyer. Also, this form is admittedly a "bare-bones" form, so the lawyer should feel free to modify it.

last will and testament of mary jane roe

I, Mary Jane Roe, a resident of Madisonville, Hopkins County, Kentucky, do make this to be my Last Will and Testament, hereby revoking all prior wills and codicils.

ARTICLE IIdentification of Husband and Children

A. My Husband's name is Richard Henry Roe, and all references in this instrument to "my Husband" or to "my Spouse" are to him only.

B. My children are Delores Lynn Roe, Carol Rae Roe, and Kent Allen Roe, and all references in this instrument to "my children" are to them only.

ARTICLE IIPayment of Debts and Funeral Expenses

I direct that all of my just debts, my funeral expenses, and costs of estate administration be paid as soon as practicable after my death.

ARTICLE IIIPayment of Taxes

All inheritance, estate, and succession taxes, including interest and penalties payable by reason of my death, shall be paid from my residuary estate.

ARTICLE IVDisposition of Tangible Personal Property

All of my clothing, jewelry, personal effects, automobiles, and all other similar tangible personal property not otherwise specifically bequeathed that are owned by me at the time of my death, I bequeath to my Husband. If my Husband shall not survive me, I bequeath in equal shares to my children who survive me all of such tangible personal property.

ARTICLE VBequest to Husband

I bequeath in fee simple my entire residuary estate to my Husband, Richard Henry Roe, and if he should disclaim all or any part of this bequest, such disclaimed property shall pass...