Albany, Georgia, lawyer Ben Reach met with Randy Culp on a Monday morning. Randy was a quail hunt manager and general hand on Sunny Slope Plantation near Thomasville.
“What can I do for you, Randy?” Ben asked.
“It’s about Mom, Mr. Ben. She has cancer, not expected to live long. She asked me to see you about a will for her.”
Ben was saddened to hear of her illness, but glad she and Randy have turned to him for advice about a will. And Randy’s sad news meant an opportunity for Randy’s family and his ill mother that Ben had hoped might develop. The opportunity grew out of a change in federal tax law that occurred after Vanessa’s marriage to Bryan Harrison. The change was known as “Portability.”
Randy’s mother, now named Vanessa Harrison, was the second wife of Bryan Harrison, owner of Sunny Slope Plantation. They had married in 2009, after their first spouses had died. Vanessa’s first spouse, Jim Culp, Randy Culp’s father, had been manager of Sunny Slope Plantation for Bryan Harrison before his death in 2000. Vanessa had then been head housekeeper of the Sunny Slope Big House for the Harrison family.
Ben recalled that Vanessa had consulted him before marrying Bryan Harrison about the premarital agreement Bryan Harrison had asked her to sign. It had been drafted by Bryan Harrison’s Boston lawyers. It was of the “what is mine is mine and what is yours is yours” variety, meaning if Bryan Harrison died before Vanessa she would have no rights to inherit anything from him. Ben had pointed out to Vanessa that by marrying Bryan Harrison she would be giving up certain rights she had as surviving spouse of Jim Culp. She elected to sign it as presented by Bryan Harrison’s lawyers.
Had Vanessa and Bryan Harrison married after December, 2010 the premarital agreement presented to her by Bryan Harrison’s lawyers would have contained one additional provision for Bryan’s benefit:
“Vanessa agrees to provide in her will that if Vanessa dies before Bryan her executor will file a Federal Estate Tax Return transferring to Bryan any part of her unused federal gift and estate tax exemption equivalent.”
That exemption equivalent would enable Bryan to give or leave at his death, gift or estate tax free, the amount of unused exemption equivalent she had left unused at her death. If she died in 2026 that exemption equivalent could save Bryan Harrison 40% of $15 Million or $6 Million (Vanessa would die with no net estate).
Because Vanessa was not required by law to have her executor file an estate tax return leaving her unused gift and estate tax exemption equivalents to Bryan, she had a bargaining chip, and Ben intended to use it for the benefit of her family. He explained to her son Randy Culp how that might be done.
“I have a son, Randy Jr., who has been accepted to medical school, but we do not have the money to pay for it so Randy Jr. will have to borrow that cost,” Randy said.
Ben smiled.
“I am going to enjoy explaining that to Bryan Harrison’s Boston lawyers,” Ben said with relish.
“And if Bryan prepays the tuition, it will not use up any of the exemption equivalent your mother will leave him,” Ben added.