Recent Developments


Tax Authorities Weren't Chicken:

The widow of Colonel Sanders estate left charitable bequests to two colleges. The will was silent as to which beneficiaries should pay estate taxes. Kentucky law doesn't exempt charitable beneficiaries from sharing in their allocable share of estate taxes. So, since the will was silent, the charities had to kick in their share. This is generally not the intended result because there is a "spoiler" effect when a charity has to pay tax. The bequests to the charity are tax deductible, but these deductions are reduced if dollars are allocated to the tax man. Without a clear direction in the will, the estate was left to whatever the state law default rules were. Since the tax authorities aren't chicken, you should crow until your lawyer drafts it right. Taxpayers frequently don't want to bother with many of the administrative details ("boilerplate") of their estate plans and documents, but ignoring details is not what gets the result you want. Hael v. Moore, Nos. 2005-CA-001895-MR & 2006-CA-000662-DG, 2008 (Ky. Ct. App. 1/4/08).


Divorce Digs New Depths: Ugly divorces seem to know no bounds, a recent case, however, plumbs new depths with a vain attempt at creative legal maneuvering. Here's the play by play. 3rd period, a minute to play. Mom was about to die. Son was so behind on child support and alimony only a miracle kept him out of the penalty box. Mom revised her will leaving Son's inheritance to Daughter so that Son's ex-wife (no longer in the running for family MVP) wouldn't be able to use his inheritance to pay arrearages in child support and alimony (OK, so Son wasn't an angel either!). Not to worry, Daughter promised Son (her brother) she'd give him all his inheritance when the divorce issues disappeared (some gift tax issues on that one). Son's ex-wife had a creative attorney who argued that Mom's changing her will was a fraudulent conveyance. The judge declared no goal because Son had no right to Mom's estate, so Mom could do as she pleased. But this game may go into overtime. The court suggested that Ex-Wife allege a constructive trust based on the Daughter's promise to transfer assets to Son. Cabral v. Soares, 69 Cal. Rptr. 3d 242 (Ct. App. 2007). Go Red Wings!

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