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Updating estate plan can save families from feuds

On Behalf of | Jul 30, 2012 | Heirs & Beneficiaries

It’s an unfortunate reality that heirs and beneficiaries can sometimes become locked in unfortunate disputes over estates once a loved one passes away. Nevada residents who are considering whether or not estate planning is necessary may want to pay attention to the case of a family now locked in one such inheritance feud. A father is at odds with his two daughters over their late mother’s half of the couple’s estimated $100-million estate.

The disagreement apparently arises because their mother died in 2010, when the federal government was not levying an estate tax. How did this lead to friction between the man and his estranged daughters? Often, people draft their trusts and wills so that an amount equal to the annual estate tax exemption goes into a bypass trust which passes directly to the decedent’s children. Whatever amount remains above that then passes into a marital trust for the surviving spouse, and estate taxes are deferred until that spouse passes away.

However, in the year that their mother died, there was no estate tax levied. The daughters apparently argued that all of the money in their mother’s estate should have passed into their bypass trust. They seem to believe that the amendment their mother signed just 12 days before her death amending her estate planning documents to send all of the money into a martial trust for her husband should not have been honored.

A California judge does not seem to agree with them, at least according to a tentative judgment he recently made. He decreed that their mother’s half of the estate will go into a martial trust for their father. It will only pass to them upon their father’s death. While the circumstances leading to this specific family feud are unique since they arose due to an anomalous tax year, this case does illustrate how important it is for Nevada residents to think about their estate planning needs ahead of time. Sometimes, having clear and established guidelines in place can help lower the chance for family feuds over inheritances to arise.

Source: Financial-Planning.com, “Tweten Family Feud Illustrates Importance of Revising Estate Plans Annually,” Ann Marsh, July 20, 2012