For those in Woodland Hills who have considerable assets to pass on to beneficiaries, one concern that they may want to address is estate taxes. In many cases, tax considerations are often overlooked in estate planning because one’s estate must reach several millions of dollars in value in order to meet the federal estate tax requirements. If one’s estate does warrant taxes being levied, then the issue of how they are paid could potentially cause tension amongst beneficiaries.
Such has been the case in an ongoing to dispute between the widow of the late author Tom Clancy and his children from a previous marriage. In his will, Clancy left a trust estimated to be worth one-third the total value of his estate, as well as properties valued at close to $7 million to his late wife. The remainder was split into another series of trusts, one which was meant for his widow and her family. The others were left to the children Clancy had with his first wife, all of whom are now adults.
The cause of the dispute in this case was an amendment made to the author’s will that stated that none of the money used to meet the estate’s tax obligations was to come from his late wife’s assets. Clancy’s personal representative had proposed, however, that a portion of the tax debt be paid out of the aforementioned trust shared between her and her children. Ultimately, the Maryland Court of Appeals voted to recognize the amendment, leaving Clancy’s adult children responsible for the estate’s $16 million tax bill.
Avoiding tension over who must pay estate taxes once one is gone may be difficult, yet not impossible if one has a skilled estate planning attorney at his or her side to help clearly express his or her wishes.
Source: The Baltimore Sun “Court of Appeals rules Tom Clancy’s widow isn’t responsible for taxes on his estate” Prudente, Tim, Aug. 25, 2016