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| A CODICIL MISHAP On Maryland's Eastern Shore, a 70-year-old businesswoman came in for her personal estate plan ... and, during the conversation told me about an estate for which she was serving as executor. Her late friend, a medical doctor, had no heirs and had, therefore, decided to give his entire estate to charity, namely to his undergraduate and graduate colleges. His will designated half of his $3 million estate to each. When an estate is left entirely to charity, there is no federal estate tax. The estate is not taxable. Shortly before his death, he executed a codicil to the will saying, therein, that the executor could give up to one percent of his estate to a niece. After his death, the IRS audited the Federal Estate Tax Return and held that the codicil made the entire estate taxable. Before she could give the bequests to the colleges, the business woman had to pay tax of about $1 million. She concluded her story: "It has been 10 years since his death and I have not been able to write the check to the colleges yet." Exactly where the fault for this tragic story lies is still open to question. I tell the story here only to note that estate planning can be a complex issue and that it behooves everyone to seek and to adopt the very best advice possible. Codicils, especially, can create enormous problems. See also, Longhand Notes Appended to a Typed Will |
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