Family Feud Illustrates Importance of Revising Estate Plans Annually

?

If anyone needs proof of the importance of revisiting their estate plans annually, the case of the high-net-worth Tweten family on the West Coast should supply it.

A decision in the case this week also may set a precedent for other cases involving a death in the anomalous tax year of 2010 when the federal government did not levy an estate tax.

In a "tentative" ruling this week, a Superior court judge in Riverside County, Calif., found on behalf of Leonard Tweten, the founder of audio visual company Magnolia Audio Visual, that his two estranged daughters may not receive their late mother's half of the $100 million estate right away. Instead, the estimated $50 million in dispute will remain with their father, who will derive income and other benefits of ownership of the sum contained in a marital trust. The sum will pass to the daughters only on his death.

Attorneys for Leonard Tweten, 85, claim the decision demonstrates that courts will rule to support the intent of A decedent, regardless of technical glitches related to the anomalous tax year. The attorneys add that the case underscores why clients should always reconsider their estate plans annually given the annual flux in estate laws. If they don't, they could end up with fractured relationships among heirs like the Twetens.

"This suit has kind of torn the family in half," says Rodney Lee, an attorney for Leonard Tweten of Palm Desert, Calif., pointing out that even Tweten's relationship with his grandchildren now is ruptured.

"Even the most skilled professionals may be there and it may not dawn on them that your estate plan may change as a result of a change in the law," says Lee, of Ervin Cohen & Jessup in Beverly Hills.

Had Eileen Tweten, Leonard's wife of 58-years and a longtime co-worker in the family company, died in another tax year, no opportunity for such a dispute could have arisen. The fact that she died in 2010 made all the difference.

Typically trusts and wills are constructed so that a portion of the estate equal to the annual estate tax exemption goes into a bypass trust in order to pass directly to the children. Any amount above that which is subject to an estate tax goes into a marital trust for the surviving spouse. The marital trust defers taxation on its contents until the death of the surviving spouse. In this way, and had their mother died in 2008 or 2009, the Twetens' three children (only two of which have sued) would have received the amount of estate tax exemptions available in those years: $2 million in 2008 and $3.5 million in 2009.

However, when the estate tax is zero - as it was in 2010 - all the assets in the estate enter the bypass trust to transfer to the children. Some, but not all, states have passed legislative fixes to the potential problem. California decided not to in order to give people the option of passing assets to the next generation this way, according to the daughters' lawyer, Adam Streisand of Loeb & Loeb in Los Angeles.

Leonard and Eileen Tweten signed their estate planning documents in 2008 after several months of meeting with financial planners and lawyers. Two years later, and just eight days before she passed away, her husband, an attorney and financial planner - Matthew McCutchen, CEO of McCutchen Group in Seattle - gave her an amendment, intending to ensure those funds would pass to Leonard via the marital trust and not enter the bypass trust.

The daughters, now middle-aged, contend that their mother was well aware of the absence of a federal estate tax in 2010 and wanted those funds to pass immediately to them.

"Everybody knew that was the law" in 2010, Streisand says. "The Twetens knew it. This trust simply said give the max amount to my kids and the rest defer into a marital trust until my husband died."

Instead, Streisand says, no one explained what the amendment meant to Eileen Tweten before she signed it in a "terminal delirium," according to Streisand. The daughters allege their father or someone else used "undue influence" to obtain a signature.

Lawyers for the father say this is not the case and that Eileen Tweten was fully aware of what she was doing.

"Their kids just tried to push (a technical loophole) open to take advantage of it," Lee says.

After both parents died, he adds, "The mother wanted the money to go to the kids outright. The father wanted it to go to them in trust. They were both very respectful of each other's views. There was absolutely no evidence that in the off chance that one of them were to die in 2010 that they would take advantage of what some have called 'the home run,'" a term the daughters used in the case to describe the tax opportunity in 2010.

Source: http://www.onwallstreet.com/news/tweten-family-feud-shows-need-to-revise-estate-plans-annually-2679961-1.html

walker recall censor pipa and sopa sopa pipa wikipedia blackout kyla pratt justified season 3