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Will/Trust Clauses

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Incentive Trust Provision (2 Pages)
$ 39.00

This is an Incentive Trust Provision. It is used in wills or trusts to create a specific reason for a distribution (or an additional distribution) for a beneficiary who reaches certain milestones. The milestones may be drafted either as a reward for positive action or as an incentive to avoid negative behavior.

Incremental Distributions to Beneficiaries Will Clauses (6 Pages)
$ 19.00

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

 

Marital Deduction Provisions Will Clauses - 3 Clauses (6 Pages)
$ 29.00

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)

Portability Election for Estates and Trusts - 4 Alternative Clauses (3 Pages)
$ 49.00

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, the “deceased spousal unused exemption” (DSUE) which will be used in the Forms suggested below.


Even with the enhanced transfer tax exemption of the 2017 Tax Cuts and Jobs Act, filing Form 706 to gain portability remains the tax planner’s recommendation. The 2017 Act sunsets after 2025.  “Political risk” suggests that the current exemption could be reduced sooner. View the portability election as “death tax insurance” – just in case the surviving spouse of a modest estate suddenly and unexpectedly becomes wealthy, the enhanced DSUE from the deceased spouse is in place.

Powers Clauses: Broad Powers Clause to Guide the Actions of the Fiduciaries; Special Powers Clause for Business Interests Owned by the Testator; Power over S Corporation Issues Clause (6 Pages)
$ 19.00

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

Promissory Note For Family Transactions Including Financed Net Gifts (2 Pages)
$ 29.00

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.

Protection of Minor and Incompetent Beneficiaries from Outright Inheritance Will Clause (2 Pages)
$ 19.00

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

Tangible Personal Property Will Clauses - 4 Clauses (4 Pages)
$ 19.00

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

Use the Appropriate Tax Clause - 3 Clauses (4 Pages)
$ 19.00

Using the correct tax clause in a Will is a very important consideration. Generally, if taxes (federal estate taxes, state estate and inheritance taxes) are taken from a share passing to a spouse or to charity, such taxes will reduce the otherwise available marital or charitable deduction and increase the tax liability of the estate. This issue is included specifically on the federal estate tax return (Form 706) and is highlighted in the IRS Estate Tax Auditor’s Manual. When such a tax increase is warranted, there is a circular algebraic calculation required, and the resulting tax increase to the estate can be significant.

3 Clauses To Address:  Using The Appropriate Tax Clause


CLAUSE 1: All Estate and Inheritance Taxes Arising on the Decedent’s Death to Be Paid from the Residue of the Estate without Apportionment Against Any Beneficiary 

CLAUSE 2: Taxes to Be Paid from the Credit Shelter Portion of the Estate; If an Interest in a  QTIP Trust is Held by the Decedent, the Tax Due on the QTIP Trust Portion is to be Paid from the QTIP Trust Property

CLAUSE 3: Address the Generation-Shipping Transfer Tax that may be Payable as the Result of a Taxable Termination 

 

Will Clauses Addressing Long-term Trusts Created Under Wills – Rule Against Perpetuities and the Delaware Tax Trap Concerns (2 Pages)
$ 19.00

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

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