u/heynowbeech

In Washington state, a decedent either uses the state's estate exemption or the exemption is lost. In the situation of a married couple with a projected WA taxable estate, we will often use an exemption trust (often funded via disclaimer language) in order to preserve the exemption of the first spouse to die (which is otherwise lost if the marital deduction is used instead).

The thing is, the federal exemption is indeed portable (and quite high) and upon the death of the second spouse we would hope for a tax basis adjustment for not only the survivor's property, but also the property held within an exemption trust for the survivor's benefit, all while keeping exemption trust assets out of the gross estate for WA estate tax purposes.

To this end, what I've seen for many years is the exemption trusts must pay net trust income to the survivor at least annually AND the survivor is not given a general power of appointment over the trust. Until last week it has been my understand that such a relationship would provide an exemption for WA estate tax purposes, but not for federal purposes. Then, when the survivor dies, the exemption trust assets will not be included in their taxable estate for WA estate tax purposes, but will be federally, which would, in turn, allow a tax cost adjustment to the trust assets for federal purposes.

This said, an attorney I am currently working with believes an exemption trust must be handled the exact same way for both federal and WA estate tax purposes? Is this correct? If so, why force the payment of net trust income from the trust to the surviving spouse? Sometimes I feel like I'm taking crazy pills lol.

I am not an attorney, but I have been helping to develop and implement estate plans for over 30 years, the first half of which I worked for a very wealthy multi-generational family consisting of well over 1,000 trusts and over 250 households. When working for that family we were fortunate in that we had TONS of time to look at and consider all sorts of things, including estate planning. When attorneys question those well-considered estate planning positions, it causes me to think I'm in some sort of alternate universe, which is where I now find myself. I need a sanity check.

Washington a community law state. In estate and tax planning, this is important because ALL community property receives a tax cost adjustment to the FMV on the date of death of the first to die (I'm there's a potential alternative valuation date). When couples have a large amount of unrealized appreciation, this is a huge opportunity on the income tax side. This said, even in a community property state, there can be separate property which would only receive a basis adjustment upon the death of the owner. We always recommended taking this risk if the owner was relatively young and/or if the relationship was shaky, BUT if the couple was old and had been together for years and years with essentially no chance of divorce, we would recommend an immediate Community Property Agreement (CPA) without the "vesting upon death prong".

Fast forward to last week when an estate planning attorney would not agree to create an immediate CPA, but only a one which would "spring" upon the death of the first spouse AND would also not remove the "vesting prong". The attorney's reasoning is that they believe the very purpose of a CPA is for disposition of assets and not for a tax cost basis adjustment. Further, any separate property made community upon the date of death of the first spouse will NOT receive a basis adjustment due to the Section 1014(e) exception, so from my perspective, the attorney's CPA is simply there to function as a "poor man's Will", which is absolutely not needed IMO. This couple is very old, has been together forever, there is currently separate property, some of the property has very low tax cost basis, and it's totally unlikely they will ever get a divorce and even if they did assets have been commingled well beyond recognition.

Am I crazy to believe this couple should execute an immediate CPA without the vesting prong or is the attorney correct that we should not worry about a basis adjustment, instead focusing solely on disposition?

Over the last couple years I’ve bought several Japanese maples. After learning of the importance of exposing root flairs when planting I’ve taken special care to do so. Many JM come with exposed or nearly exposed flairs, but some are REALLY buried. Heck, I recently dug a Mikawa back up that I planted 2 years ago and found the flair was nearly 6 inches below the top of the nursery soil. Is it unusual for flairs to be so deeply buried in pots coming from nurseries? Or am I digging too deep lol?

Im in WA and Series 65 requirement for IARs is waived for CFPs, but it recently came to my attention not all states have adopted this approach. Which state or states don’t follow this general rule?

I love to read and especially love to read books about or set in places where I'm traveling, but for whatever reason I had a difficult time finding books about or set in Belize.

Before, during, and after my recent trip to Belize, I did read these three that I thought were pretty good, though:

• The Last Flight of the Scarlet Macaw: One Woman's Fight to Save the World's Most Beautiful Bird - This book was about Sharon Matola and her founding of the Belize Zoo and also her fight to stop a dam project in Cayo. Highly recommend this book before visiting the Belize Zoo and the Cayo district. In the first part of the book there's also a good overview of Belize's history.
• Jaguar - This book is about early jaguar studies in Cockscomb and the founding of the Jaguar Preserve. I only learned about this book when hiking the Ben's Bluff trail as it was mentioned on an info board along the way. I highly recommend this book before visiting the Cockscomb basin.
• Beka Lamb - Fiction set in 1950s Belize set in Belize City and St. George's Caye. Essentially a girl's coming of age story that also offer peeks into aspects of Belizean culture, history, and politics.

So, what are some of your favorite books set in or about Belize?

I’m reading “Jaguar” which is essentially about early jaguar research by a young researcher (also the author) in the Cockscomb basin (great book so far btw). He talks about the prevalence of botfly, malaria, and hookworm infections in the 1980s, the time when the book takes place. Are any of these still a thing in Belize? I just returned and now hope I don’t have any botflies after hiking in Cockscomb lol. Serious, though. I’m guessing malaria has been contained by vaccine and hookworms with improved sanitation, but botflies?