Estate & Trust Blog

Informing and Updating

Reclamation Project

Prior to IRS recognition of same sex marriages for federal tax purposes, a transfer (by gift or inheritance) from one same-sex spouse to his/her spouse escaped transfer tax only to the extent the donor's aggregate gifts did not exceed the "exclusion amount" applicable at the time of the transfer. (The federal exclusion amount is currently $5,490,000.) Put another way, the marital deduction was not available to same-sex married couples. IRS Notice 2017-15 addresses this for certain prior transfers, and provides a filing method that allows the marital deduction to be claimed, and the used exclusion amount to be reclaimed. The Notice requires an affirmative election as detailed in the Notice

Pfannenstiehl for the Rest of Us

Assets are often held in trust for the trust beneficiary (as opposed to being distributed to the beneficiary) with the hope that trust assets would be unreachable by a claim made against the beneficiary. Whether this protection exists in practice calls for a detailed analysis of the trust assets, trust purpose and terms, and each unique fact situation - and is beyond the subject of this blog. In the 2016 case of Pfannenstiehl v. Pfannenstiehl the Massachusetts Supreme Judicial Court overturned an Appeals Court decision and stated (at least under the facts of that situation) that a trust beneficiary's interest in a trust that does not require distributions to the beneficiary cannot be reache

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