Ben Reach had warned Pete-Bob Dix from the start not to embark on his quest to make money from “portability,” a feature of the federal estate and gift tax law since 2011.
Under portability, a spouse could give to a surviving spouse on death his or her unused gift and estate tax exemption. When Pete-Bob repeatedly asked Ben supposedly hypothetical questions about the portability rules, Ben said, “Do not ask me for advice about “portability.” Ben knew how Pete-Bob’s mind worked and thus the opportunities Pete-Bob saw in “portability” from reading about it in the Wall Street Journal.
Portability made it possible for a rich person to marry a poor person likely to die soon and “inherit” the poor person’s unused gift and estate tax exemption, to the benefit of the rich person’s donees or inheritors. The “portability” feature was worth a tax saving of 40% to the rich person’s beneficiaries, or in 2026, up to $6,000,000 of otherwise-payable gift or estate tax.
Despite Ben’s warning, Pete-Bob could not resist promoting schemes allowing him to share by commission in this tax-savings largess authorized by Congress and the President.
All it required was for a healthy rich person to marry an unhealthy (preferably terminally ill) poor person, and wait for the poor person to die. Many a poor person, Pete-Bob realized, would likely agree to the marriage to enjoy, however briefly, the luxuries of marriage to a rich person. Pete-Bob also saw that the poor person’s children would likely applaud the marriage, if they got to share in the tax savings. And the rich person’s children would likely applaud the deal as its primary beneficiaries and be willing to share some of the savings with the poor person’s inheritors.
Pete-Bob saw his own opportunity to share in the $6 million value of gift and estate tax exemption through “portability” as a super salesman. A 10% commission, or $600,000, was certainly reasonable, in the eyes of Pete-Bob. That became Pete-Bob’s “ask” for promoting and negotiating a “portability arrangement,” as Pete-Bob labeled his pitches to prospects in the Quail Belt, where he knew many affluent folk and had access to many single old and sick poor owners of exemptions eligible to be bequeathed to rich very-likely-to-survive prospective spouses.
Pete-Bob had long experience in persuading folk to buy things that would yield him a commission, from bird dogs to pleasure riding and show horses, to autos, to real properties, especially quail plantations, whose magic Pete-Bob knew intimately. Long acquaintances of Pete-Bob often referred to him as a likable rascal, or worse, and he was.
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Pete-Bob’s urgent appeal to Ben to get him out of dire trouble this time was occasioned when word came of a gift tax return audit of Benjamin Britt in which an IRS attorney had subpoenaed the records of Sam Nixon MD for his patient Mandy Britt who had allegedly married Benjamin Britt in Thomasville, Georgia shortly before her death.
Her daughter from an earlier marriage had as her personal representative filed a portability estate tax return transferring Mandy’s entire unused gift and estate tax exemption to her surviving spouse, Benjamin Britt, a wealthy quail plantation owner, who had immediately after Mandy’s death used the exemption to give his children cash in exactly the amount of the exemption inherited from Mandy. Benjamin Britt had previously used all his own exemption to make gifts to his children.
When Sam Nixon MD told Ben about the subpoena for Mandy Britt’s patient file, Ben immediately suspected what had happened.
Pete-Bob had proposed and negotiated a marriage between Benjamin Britt and Mandy White, a retired domestic employee of Benjamin Britt. Benjamin was then a widower. At that time, Mandy resided with her daughter in her small home in Thomasville and was suffering from dementia.
The motive for the alleged marriage was, Ben now suspected, “portability, “and promoted to Benjamin by Pete-Bob. After the marriage, Benjamin had made a small gift to Mandy (gift tax free because of the marriage) which her daughter, acting under a power of attorney, used for Mandy’s care expenses until her death. Mandy and Benjamin never lived together, except for the night of their alleged marriage, when Mandy slept in Benjamin’s plantation Big House, having been driven there by her daughter and picked up by her daughter next morning.
Sam Nixon MD had long been Mandy’s personal physician.
Ben suspected someone had used the IRS fraud Whistleblower Office to submit a claim for an award of 15% to 30% of the gift tax Benjamin had avoided using Pete-Bob’s scheme.
When Pete-Bob called Ben’s office seeking an appointment, Ben had already told his PIC (Person in Charge), Joanne, to tell Pete-Bob he would not discuss the matter with Pete-Bob. Then Benjamin Britt called Ben seeking representation on the matter, and Ben declined, saying only, “Mr. Britt, for reasons I cannot reveal, I cannot undertake your representation.”
(Note: this story is fiction, as are Ben Reach, Sam Nixon MD, Joanne, Pete-Bob Dix, Mandy White aka Britt and Benjamin Britt).