In some cases, a testator may create a trust under a Will that may have a long duration. Perhaps the testator intends to create a perpetual trust, such as a Dynasty Trust, or at least a long-term trust to benefit several generations of family members. In a number of states, the rule against perpetuities has been abolished, so that there is no limit on the duration of a trust. Other states have extended the possible duration of a trust for hundreds of years, or even up to a thousand years, so that special planning for the rule against perpetuities is not necessary. However, many states still retain the rule against perpetuities, which states that an interest in a trust is void if the interest does not vest in a beneficiary within lives in being at the creation of the trust, plus twenty-one years. Accordingly, where the rule is still recognized, it is necessary to include overriding language in a Will to “save” the long-term trust and make certain that no trust created under the Will will fail to vest within the required perpetuities period.

3 Clauses To Address The Following Issues:

CLAUSE 1: Rule Against Perpetuities Savings Clause

CLAUSE 2: Broader (more flexible) Rule Against Perpetuities Savings Clause

CLAUSE 3: Avoid Springing the Delaware Tax Trap

It is important to include a separate tangible personal property clause in a Will, even if the remainder of an estate is to be left to the same person who will be receiving the testator’s personal property. This is because of an estate income tax rule that says any distribution of property from an estate carries out the estate’s distributable net income to the recipient of that property - unless the recipient receives a specific bequest of property. Accordingly, rather than have tangible property items such as furniture, automobiles, jewelry, etc. (as distinguished from items of intangible property like bank accounts, securities, etc.) become taxable income to their recipients, a separate personal property clause is used in a Will apart from the other dispositive provisions.

The Follwing 4 Tangible Personal Property Will Clauses Are Included:

CLAUSE 1: Personal Property to Spouse, Then to Children – No List Provided

CLAUSE 2: List Reference; Balance to Spouse, Then to Children

CLAUSE 3: Selection of Personal Property Assets by Random Drawing

CLAUSE 4: Sell all of the Personal Property

Even if the testator includes in the Will appropriate provisions protecting the expected beneficiaries until a supposed age of maturity is reached, it is always possible that an unanticipated order of deaths will create a beneficial interest in someone not anticipated who is a minor for whom no special trust provision was created, or it is possible that as the result of illness, injury, addiction or some other unanticipated problem, a beneficiary may be legally incompetent at the time the beneficial interest is to vest. Where any of these possibilities may occur, it is a good idea to have a “catch-all” clause in the Will that allows property otherwise passing to a minor or incompetent beneficiary to be held by fiduciaries for that beneficiary for so long as the period of minority or incompetence may continue.

1 Clause To Address The Following Issue:

CLAUSE 1: “Catch-all” Clause for Minor or Incompetent Beneficiaries

This document is a form of a demand Promissory Note that may be used in connection with a family transaction, including a financed net gift. Especially when interest rates are low, it is advantageous to lend money to family members taking advantage of these low interest rates. The stating of the required IRS interest rate for the duration of the loan eliminates any argument that the loan should be viewed as a below market transaction and a gift. Accordingly, parents or grandparents can loan money to children or grandchildren in exchange for a permitted low interest rate with no transfer tax consequences.

Every well-drafted Will includes a powers clause setting forth the various powers granted to the fiduciaries named in the Will. In some cases, this is a long clause setting forth multiple powers, in other cases it is a short clause incorporating by reference a state statutory provision granting specific powers not necessarily included in the statutory provision. It is recommended that a listing of powers clause be included in a Will, making certain that the fiduciaries have broad authority to manage the assets of the decedent’s estate. It is suggested that this is preferable to assuming (perhaps incorrectly) that a state statute is broad enough to permit the action the fiduciary desires to take.

3 Clauses To Address The Following Issues:

CLAUSE 1: Broad Powers Clause for the Fiduciaries of the Estate; Self-Dealing by a Fiduciary Prohibited

CLAUSE 2: Special Powers Clause Addressing Closely-Held Business Interest

CLAUSE 3: Instructions Regarding S Corporation Interests Held by the Testator

This Form provides alternative Portability Clauses to be used in connection with a Will or Trust. The concept of Portability was introduced in the 2010 Tax Relief Act (as new Code Section 2010 (c)) as a way to permit an election to be made for the unused federal estate tax exemption of a decedent to pass to his or her surviving spouse so the spouse could utilize the exemption. The Portability rules introduce a new phrase into the estate planning lexicon,

For a married client, the marital deduction provision will likely generate the largest deduction from federal and state estate taxes. Accordingly, it needs to be addressed carefully in every Will. There are three commonly used variations of marital deduction clauses.

3 Clauses Are Included To Address The Following Issues:

CLAUSE 1: Marital Share Outright to Surviving Spouse

CLAUSE 2: Marital Share Using General Power of Appointment Trust

CLAUSE 3: Marital Share Using Qualified Terminable Interest Property Trust (QTIP Trust)

When preparing a Will where the children or grandchildren of the testator are to be beneficiaries at some point in time – perhaps upon the death of the testator or perhaps after the death of a prior beneficiary, such as the spouse of the testator or the parent of the designated beneficiary, it is possible that such children or grandchildren are to receive their shares of the testator’s estate outright. In such a case, the drafting of such a provision is simple. However, in many cases an outright distribution is not desirable, often because the testator wants to be comfortable that a future beneficiary has reached an age of at least supposed maturity. Where this is the case, a continuing trust is typically created, allowing the interest earmarked for the beneficiary to be held until the desired age is reached. Again, the testator has decisions to make. Should the beneficiary’s interest simply be held in trust until a designated age is reached, or should there be a series of distributions at designated ages so that the trust property held for the beneficiary is distributed in increments as various milestone ages are reached?

2 Clauses To Address The Following Issues:

CLAUSE 1: Distribution Plan for Beneficiaries in Two Increments

CLAUSE 2: Distribution Plan for Beneficiaries in Three Increments