Ben Reach had seen some strange rifts on the theme of inheritance greed since in 2011 “Portability” had come into the federal estate tax law.
Under “Portability, “a dying spouse could leave the surviving spouse his or her unused estate tax exemption, for the survivor to use against future gifts or bequests.
Because of “Portability,” some children were now encouraging single parents to marry poor (preferably penniless) candidates in questionable health in hopes of inheriting the benefits of their estate tax exemptions.
More than one new client seeking advice on this from Ben traced back to Pete-Bob Dix, the scheming jack-of-all-trades who for decades had come up with schemes to profit from dubious transactions. Pete-Bob was a lovable rascal who, beginning as a plantation hunt guide and dog trainer-handler, had progressed through show-horse pinhooker, auto salesman (Toyota to Lexus to Mercedes to Bentley), to plantation real estate salesman. On the side, he also occasionally sponsored high stakes poker games, live pigeon shoots and, until recently, cock fights which he had given up on fear of risking commissions on sales of property to wealthy PETA donors.
Frank Knox was a long-time widower client of Ben’s with an estate of about $30 million. He had one son, Sam, who, not untypically, was anxious to inherit his father’s wealth.
Frank showed up at Ben’s office one day seeking advice on this. He had recently met Irma Gains, a widow lady near Frank’s age introduced to him by Pete-Bob at a horse show and they had fallen in love. Ben knew and liked Irma, who in an earlier life had been married to a worthless rascal of Ben’s acquaintance who had had the good grace to die but left Irma impecunious.
Frank and Irma had fallen in love and decided to marry and on Sam’s urging Frank was seeking advice from Ben on a prenup. Sam, on Pete-Bob’s advice, called Ben and asked that he include a clause requiring Irma to require her personal representative to file a “Portability 706” to leave Irma’s unused estate tax exemption to Frank if she died before him. Ben would have done so in any event—failure to do it would have been malpractice.
Frank and Irma had wed and enjoyed a decade of marital bliss. Then Irma died. Her will included the requested-by-Sam direction to file a Portability 706 leaving her unused estate tax exemption to Frank. But in exchange, Irma had bargained for a provision requiring Frank to leave at his death to a charity sponsoring cat adoptions a sum equal to his estate tax savings from her portability election.