Federal estate taxes:1.- Scheduled for repeal for 20102. Tax rate probably for 37 to 52%3. Exemption 1 million 3.754. GST Generation skipping tax, grandparents will pay estate tax and pay a GST tax, but if they would have given it to their children, they would only have paid estate taxes. 20
Gifts: the limited amount that you can give w/o taxing the receiving party is 11,000.Hypo: If I give 11,000 to my son and 11,000 to my daughter in law, and do the same thing w/my other three kids and spouses, I had been given away 11x2x4=88,000 w/o being taxed. Hypo:I have 10 M; then I leave for my children the 1 M exempted and the other 9 M to my husband. Because of the marital deduction the husband pays nothing. For the marital deduction you have to give your spouse a power of appointment and a life estate. There was a provision (QTIP) that allowed marital deduction when the spouse was given; this will make the wife to get an income interest through P. 292.Trustee can be sued, they charge fees.(Swanson- If there is a person who in his own right, or as a part of his estate, would take all of this property if [the life estate] ended now:• if there is such a person, then the remainder isvestedsubject to partial or complete defeasance• if no such person is identifiable, then the remainder is subject to a condition precedent and is a contingentremainder.)Provision IVThe first part of the trust was the Marital Deduction. Then to the nine children. If any children died prior to wife, then to their children (didn’t use ‘issue”)(it’s vested=lawyer made mistake).Provision VThen to nine equal; one share to each surviving children, or for the then surviving issue of each deceased child. (this one looks like a contingent more than vested.)vested remainder-----------------------followed by---------------- Executory limitationcontingent remainder------------------followed by-----------------another contingentProblems on p. 286 b, c, 2, 3E. Rules Furthering Marketability by Destroying Contingent Future Interests1. Destructibility of Contingent RemaindersA remainder in land is destroyed if it does not vest at or before the termination of the preceding freehold estate. If the remainderman is not ready to take seisin when it is offered, he is wiped out and seisin moves on to the next vested estate.(Florida still recognizes that rule in regard to an interest in land)(a)if it does not vest at or prior to termination of the preceding estate; contingent remainder fails (only applies at law = i.e. deed)21
Example: O to A for life; remainder to B heir’s: if A dies before B, then B’s heirs contingent remainder is cut off because the condition was not met before the natural termination.(b)Purefoy v. Rodgers – if an interest can take both as a contingent remainder and as an executory interest; it will be treated as a contingent remainderExample: O to A for life; remainder to A’s children who reach 21.