Family, Kinship, Descent, and Distribution (Portfolio 858)

Description

Bloomberg Tax Portfolio, Family, Kinship, Descent, and Distribution, No. 858, examines in detail the interaction of estate planning and family, kinship, descent, and distribution. The focus of the Portfolio is on the numerous relationships that fit under the standard descriptions of status, such as child, descendant, and spouse. Whether these terms are being used in a will, trust, or other dispositive instrument, the changing nature of relationships is giving rise to vital issues that the estate planner must take into account. Facile, comfortable assumptions can no longer be made as to who is entitled to property based on status. For example, rights as an heir, devisee, or trust beneficiary may turn on status as a “child,” “descendant,” or “spouse.” Who qualifies as such is considerably less certain and more disputable than was traditionally the case.

There are a number of reasons for this. The law has not kept up with technological developments, such as assisted reproduction techniques. At the same time, certain state laws have expanded traditional meanings of terms like “spouse” and/or have recognized analogous relationships. Furthermore, the mobility of persons and property, along with the increasing abandonment of cross-cultural and cross-religious barriers to marriage, have resulted in multi-jurisdictional issues that have accentuated the need to understand conflict of laws rules in determining which law will determine status and concomitant rights. In addition to cross-border issues, the radical changes over time in the rights of various persons, notably adoptees, require the consideration of conflict of laws from a temporal standpoint. For example, trusts established under one set of rules may subsequently operate against a background of a new set of rules. In this scenario, the issue will be which set of rules is controlling.

Finally, state laws are not necessarily determinative for tax purposes. Federal tax law, in particular, is governed in a number of instances by its own unique rules concerning a variety of relationships. The most striking example of this is the generation-skipping transfer tax. Significantly, however, even within the context of federal tax law, these rules are not consistently drawn.

Estate planning is prospective in nature. It impacts current relatives who are intended beneficiaries, as well as future generations. In drafting plans, terminology to describe status or define a class should be used with caution and only after considering the parameters of the terms’ meanings now and what the terms are likely to mean in the future. Even when there is great flexibility in drafting available, the issues must be understood so that they can be properly addressed in the governing instruments. If not, the seeds will be sown for litigation. This Portfolio identifies and analyzes in depth the non-tax and tax law as it is, the relevant issues, especially the emerging ones, and the proper drafting and planning response.

This Portfolio may be cited as Schoenblum, 858 T.M., Family, Kinship, Descent, and Distribution.

Table of Contents

I. Introduction
II. Descent and Distribution
III. Children and Siblings
IV. Spouses, Domestic Partners, and the Status of Persons of Disputed Gender
V. The Meaning of Class Terms
VI. Federal Conceptions of Family and Kinship
VII. State Inheritance Tax Conceptions of Family and Kinship
VIII. Conflict of Laws as to Which Jurisdiction’s Law Governs in the Determination of Terms of Kinship
IX. Temporal Conflict of Laws and Changing Concepts of Kinship
X. Determination of Takers in Future: Per Stirpes and the Like