With research and drafting assistance provided by our extern from Washington University School of Law, Rachael Lynch.

As we discussed in our prior post, Review of Income Tax Deduction Rules for Charitable Gifts, an income tax deduction up to fifty percent (50%) of the taxpayer’s adjusted gross income is allowed for gifts to public charities of non-capital gain property and up to thirty percent (30%) for gifts of capital gain property. These same contribution limits apply to gifts to supporting organizations.

What is a supporting organization? Supporting organizations are described in Section 509(a)(3) of the Internal Revenue Code as charities that carry out their exempt purposes by supporting other public charities. A supporting organization generally warrants public charity status because it has a relationship with its supported organization sufficient to ensure that the supported organization is effectively supervising or paying particular attention to the operations of the supporting

With drafting assistance provided by our extern from Washington University School of Law, Rachael Lynch.

According to the Columbia Daily Tribune, effective immediately, same-sex marriages will be recognized in Boone County, Missouri for purposes of collecting unclaimed property.  This means that same-sex spouses legally married in a state other than Missouri (Missouri’s Constitution currently bans same-sex marriage) may have a right to some of the almost $68,000 held by the county.  Boone County Treasurer, Nicole Galloway, announced that this transition was merely an extension of the full-faith and credit that her office gives to legal documents from every state (and follows Missouri Governor Jay Nixon’s executive order that Missouri would recognize jointly filed income tax returns from legally-married same sex couples who file jointly for federal purposes).

No-contest clauses can give trustees a great amount of power.  Obviously, it is a power that the grantor wants the trustee to wield – in appropriate circumstances – because the grantor thought it important enough to include in his or her trust instrument.  But, a trustee must still determine whether a beneficiary’s conduct rises to a level sufficient to trigger the clause and to seek its enforcement.   And, if a trustee seeks to enforce a no-contest clause, it is probably well-advised to enforce it evenhandedly.  In In the Matter of Joseph L. Dugan Revocable Living Trust dated January 13, 2003 (unpublished disposition), the Nevada Supreme Court took a look at an attempt to enforce a clause against two of three trust beneficiaries.

Originally posted on bryancavefiduciarylitigation.com

In In re Alice J. Welch Revocable Living Trust (Vandenbrook v. Welch), a Wisconsin appellate court was required to interpret a provision in a trust instrument on how trust assets would be valued for purposes of distribution. The trust instrument provided different distribution schemes, depending on whether a certain value exceeded $5 million. So, the first question for the court was whether the value of these assets exceeded $5 million. Let’s take a look at the differing interpretations and why trust language can’t be read in isolation.

One party, Jon Welch, claimed that the $5 million cut-off point for distributing the estate was the “adjusted gross estate as finally determined for federal tax purposes.” He claimed that the trial court erred in deciding that the value was less than $5 million because it removed certain assets and loans from the total estate value. He

Knowing when to initiate guardianship proceedings for a loved one can be a difficult and personal decision.  When it comes to substance abuse, those proceedings can enter a grayer area than proceedings involving dementia, injury, or developmental disability.  At what point is an addict or alcoholic incapacitated?  What happens during moments of sobriety?  In In re Guardianship of Esterly (unpublished), the Court of Appeals of Minnesota dealt with some of these difficult questions.

Originally posted on bryancavefiduciarylitigation.com

When it comes to will execution, sometimes the belt and suspenders approach may be well advised.  But, other times, less is more.  Like, perhaps, when it comes to the number of witnesses.  When state law requires that you only need a set number of witnesses to a will, the Court of Appeals of Tennessee’s opinion in the will contest case of Estate of Woolverton shows us the potential problems that may arise when you bring in extra, unnecessary witnesses.

In Tennessee, the execution of a will requires only two witnesses.  Three witnesses, however, signed the will of Dennis R. Woolverton.  At a hearing on the will contest, only two of the three witnesses and a notary public testified about the signatures on the purported will.  The trial court held that the document was

Maintaining property in a family for generations to come can be tricky.  As the parties in Hoefer v. Musser found out, the intention of a decedent speaks volumes and can overcome procedural deficiencies such as an improper recording of a warranty deed.  In Hoefer, the Missouri Court of Appeals (Southern Division) recently held in favor of a decedent’s wishes to keep a farm in his family for “generations and generations.”  See Hoefer v. Musser, No. SD 32576, 2013 WL 6800823 (Mo. App. S.D. Dec. 23, 2013).

In Hoefer, the decedent’s nephew (Hoefer) was appointed as successor trustee to decedent’s irrevocable trust—the “Vineyard Dwain Hoefer Trust,” created during Hoefer’s lifetime.  Musser, the decedent’s niece, was appointed as personal representative to Hoefer’s estate.  The trust’s only asset was the decedent’s farm, which he intended to keep in his family for as long as possible by granting the

The use by the founders of Facebook and Twitter of grantor retained annuity trusts (“GRATs”) to reduce estate taxes has been widely publicized. What many founders and entrepreneurs may not realize, however, is that the same techniques may be appropriate for companies with more modest growth potential and that considering the use of a GRAT at an early stage may be advantageous. GRATs have been discussed previously on the blog here.

In essence, a GRAT is a method to “freeze” the value of an asset at a particular point in time so that the future appreciation of that asset’s value escapes estate tax. A grantor contributes assets to a GRAT in exchange for the right to receive fixed annual payments from the GRAT for a number of years (not for life). The amount of each annual payment includes a return of a portion of the principal amount contributed plus

The 7520 rate for March 2014 has decreased to 2.2%.

The March 2014 Applicable Federal Interest Rates can be found here.

Maintaining property in a family for generations to come can be tricky.  As the parties in Hoefer v. Musser found out, the intention of a decedent speaks volumes and can overcome procedural deficiencies such as an improper recording of a warranty deed.  In Hoefer, the Missouri Court of Appeals (Southern Division) recently held in favor of a decedent’s wishes to keep a farm in his family for “generations and generations.”  See Hoefer v. Musser, No. SD 32576, 2013 WL 6800823 (Mo. App. S.D. Dec. 23, 2013).