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. 3^rd
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!