Allocation of Death Costs

• Author: Jerold I. Horn
• Profession: Lawyer
• Pages: 195-210

195

A property owner can provide exibly for payment of death costs from his or her estate,

his or her revocable trust, a marital trust that he or she creates for his or her spouse, and a

marital trust that his or her spouse creates for him or her. Drafting becomes more complex

if the property owner wants particular assets or particular dispositions to bear, and others

not to bear, the costs. Drafting becomes even more complex if even more variables, relat-

ing to different costs, order of deaths, and sufciency of certain dispositions, are added.

The subject is difcult. It also is extremely important. Estate taxes can represent the largest

“disposition.” Failure to determine preferences and improper execution can thwart accom-

plishment of objectives.

I. EXECUTOR SHAL L PAY OR DIRECT TRUSTEE TO PAY, SUBJECT

TO SPECIFIED REI MBURSEMENT AND APPORT IONMENT

A. Form 7.1: Charges and Taxes

ARTICLE I

Charges and Taxes

My Executor shall pay the expenses of my last illness and funeral, costs of admin-

istration with respect to property wherever situated passing under this Will or

otherwise and other proper charges against my estate. My Executor also shall pay

the estate and inheritance taxes (including any interest and penalty) that are payable

because of my death. My Executor shall make the payments, without apportionment

or reimbursement, from principal of my estate as an expense of administration.

Notwithstanding the preceding portion of this Article,

a [(A)

ai [Except as set forth in subsection ([#X]) of this Article,]

I do not waive the right to reimbursement according to Section 2207 of the

Code (and corresponding provisions of state law), and any corresponding right

7

Allocation of Death Costs

Chapter 7196

to apportionment, of the taxes (and, whatever the source of the rights, of any

interest and penalty) that are payable because I have a power of appointment;]

b [([#W])

bi biA [[Except as set forth in subsection ([#X]) of this Article,]

I do not waive the right to reimbursement according to Section 2207A of

the Code (and corresponding provisions of state law), and any correspond-

ing right to apportionment, of the taxes (and, whatever the source of the

rights, of any interest and penalty) that are payable because I have a quali-

fying income interest for life]

bii [My Executor shall pay, and I waive the right to reimbursement according

to Section 2207A of the Code (and corresponding provisions of state law),

and any corresponding right to apportionment, of, the taxes (and, what-

ever the source of the rights, of any interest and penalty) that are payable

because I have a qualifying income interest for life, to such extent (if any),

and only to such extent (if any), as

(1) the taxes are payable because I have a qualifying income interest

for life in qualied terminable interest property which has an inclusion

ratio of zero, and of which I am not the transferor, for generation-

skipping tax purposes; and

(2) the qualied terminable interest property of which I am the

transferor for generation-skipping tax purposes is insufcient to

pay the taxes in full without resulting in a constructive addition for

generation-skipping tax purposes];]

c [([#X]) My

ci [Executor shall pay, and I waive the right to reimbursement according to

Section 2207 of the Code (and corresponding provisions of state law), and

any corresponding right to apportionment, of, the taxes (and, whatever the

source of the rights, of any interest and penalty) that are payable because

I have a power of appointment]

cii [, and my]

ciii [Executor

ciiiA [additionally]

shall pay, and I

ciiiA [additionally]

waive the right to reimbursement according to Section 2207A of the Code

(and corresponding provisions of state law), and any corresponding right

to apportionment, of, the taxes (and, whatever the source of the rights,

of any interest and penalty) that are payable because I have a qualifying

income interest for life]

, to such extent (if any), and only to such extent (if any), as