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Marital deduction formula clauses

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					Marital Deduction Clauses
Estate Planning Seminar Spring 2006 - Professor Popovich The following are samples of various formula clauses that facilitate the marital deduction. Please note that these are samples only and there are many other forms of such clauses (some which I think are better). Also, shold these clauses be changed in light of provisions in the 2001 Tax Act (increasing the unified credit amount with possible elimination of estate taxes after 2010)? "Strict Pecuniary Formula" Clauses (using date of distribution values) Option A -- outright marital deduction bequest (modified version of Weinstock clause at 4.31): I give to my spouse, if [he/she] survives me, out of the residue of my estate a pecuniary gift of an amount equal to the maximum marital deduction allowable in my estate for federal estate tax purposes on my death (referred to as the Marital Deduction Amount), reduced by the final federal estate tax values of all other property interests which pass or have passed to my spouse, under the provisions of this Will or otherwise and which qualify for the marital deduction. In no event shall a greater amount be allocated to the Marital Deduction Amount than is necessary to completely eliminate the federal estate tax in my estate, after considering all other federal estate tax deductions and credits (but only to the extent the use of the state death tax credit does not increase the state death taxes payable) to which my estate may be entitled. The Executor shall satisfy this bequest to my spouse in cash or in kind, or partly in each, with assets that qualify for the federal estate tax marital deduction. The assets so allocated in kind shall be deemed to satisfy the Marital Deduction Amount on the basis of their value at the date or dates of distribution to my spouse.

Option B -- marital deduction bequest in trust (QTIP or "GPA" trust): See Weinstock, at 4.31.

"Estate Tax Value Formula" Clauses (using date of death values) Option A -- marital deduction bequest in trust (QTIP or "GPA" trust) with "fair market value" Rev. Proc. 64-19 compliance: See Weinstock, at 4.33.

Option B -- marital deduction bequest in trust (QTIP or "GPA" trust) with "fair allocation" Rev. Proc. 64-19 compliance (modification of Weinstock clause, at 4.33). If my wife survives me, the Trustee shall divide my residuary estate into two separate trusts, the Marital Trust [Trust "A"] and the Exemption Trust (Trust "B"). The Marital Trust shall consist of that amount which will equal the maximum marital deduction allowable in my estate for federal estate tax purposes, reduced by the final federal estate tax values of all other property interests which pass or have passed to my wife, under other provisions of this Will or otherwise and which qualify for the marital deduction. In no event shall a greater amount be allocated to the Marital Trust than is necessary to completely eliminate the federal estate tax in my estate, after considering all other federal estate tax deductions and credits (but only to the extent the use of the state death tax credit does not increase the state death taxes payable) to which my estate may be entitled. The Trustee shall satisfy the marital deduction bequest in cash or in kind, or partly in each, with assets eligible for the marital deduction; assets allocated in kind shall be deemed to satisfy this amount on the basis of their values as finally determined for federal estate tax purposes. All property shall be divided between the Marital Trust and the Exemption Trust in such manner that any appreciation or depreciation that has occurred in the value of such property between the applicable valuation date used for federal estate tax purposes and the date of distribution shall be apportioned fairly between such trusts.


				
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