So when Eileen died in April of that year, her whole estate, rather a few million dollars, would have gone to the kids, leaving Leonard out of the money. But in 2010, the exclusion was unlimited, because there was no estate tax. The estate tax exclusion was $2 million in 2008, when the Twetens, who had sold their Magnolia chain to Best Buy Co Inc in 2000, drew up their latest trust agreement. The problem is that because the formula clauses rely on the federal estate tax exclusion - a number that changes from year to year - the split can vary widely based on the tax policy in effect at the year of death. And that was the plan for the Twetens, who were in their 80s and had been married for 58 years.
JIM TWEETEN FREE
Since assets that pass to a spouse are generally free of estate tax, this setup results in no estate taxes for the widow or widower at the time of the first spouse’s death.
JIM TWEETEN FULL
This allows the full amount of the exclusion to pass to the heirs tax-free. The formula clause typically divides the estate so that children get the amount of assets in the federal estate tax exclusion (currently $5 million per person), with the rest going to a marital trust for the surviving spouse. The trust included a common estate planning device, called a formula clause. Magnolia Audio Video founder Leonard Tweten and his wife, Eileen, had amassed a fortune and set up a trust, as many of the wealthy do to minimize estate taxes. While that had been baked into the estate tax system for years, few financial planners or tax attorneys had expected that the U.S. In that year only, there was no estate tax. A YEAR WITHOUT ESTATE TAXĪt the heart of the Tweten case were the oddities of 2010. You also need to revisit them regularly to avoid ending up with a very different result than what you think you’re planning. So you need to make sure your will and trusts are worded to accommodate all the possibilities. If you’re wealthy enough for your assets to trigger the estate tax, (which, absent new laws, means you have more than $1 million, or $2 million for a couple, as of January 1, 2013), you should know that the laws governing these taxes have been changing year after year. NEW YORK (Reuters) - A dramatic family legal battle over a $100 million estate does not often lead to life lessons for the masses.īut the California probate court decision in the case of the Tweten family, who got caught up in the one-year disappearance of the federal estate tax in 2010, offers some simple life lessons in estate planning.
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