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The Law Office of Jane Frankel Sims
YOUR Estate Matters
August 2015

Welcome to the August edition of our newsletter. We are excited to supply updated information and interesting facts to you MONTHLY now !

This issue contains estate planning alerts focusing on the possible end of valuation discounts, our most recent blog post titled "Novel Ways to Revokes a Will" and more.

As always, we are interested in YOUR insights to subjects found in each issue. Please send us any comments by replying to the email.


The Looming End for Valuation Discounts
Rumor mills are buzzing over predictions that the IRS will issue new regulations in September imposing major limits on the ability to claim valuation discounts for minority interests in family-controlled entities.  These changes are significant, and they could come at any time, but the prediction of September specifically is nothing but the purest speculation.
Valuation discounts work like this:  imagine that A and B each own $100.  They decide to create a corporation, and they each contribute $100 in return for half of the shares of stock.  How much is A's stock worth?  Probably less than $100, because A no longer has unilateral control over the money.  Valuation experts would say that the stock value can be determined by looking at the value of the assets inside the corporation and applying a discount to reflect the lack of control. 
Valuation discounts are terrific for taxpayers who want to make taxable gifts, because the discounts drive down the value of the taxable gift.  The IRS, on the other hand, is usually less enthusiastic.  For well over a decade, the IRS has been planning to introduce new regulations under section 2704 of the Internal Revenue Code limiting the ability to claim such discounts where the business owners are closely related. 
Then, back in April, an IRS representative mentioned that the 2704 regulations is among the 5 or 6 projects that are nearing completion, and she predicted that some of those 5 or 6 projects would be completed before mid-September.  She did not say that all of those projects would be finished by mid-September, and in fact, two of those projects have since been completed, so there is no way to predict when the regulations on valuation discounts will appear.
That has not stopped lots of people (including estate planning attorneys) from believing that the IRS has announced that these regulations would be issued in mid-September.  Of course, the regulations might be issued in mid-September, or they might be issued two years from now.  Nobody knows.
It can't hurt to be safe, and a number of clients are now moving forward with planned gifts to trusts before the end of August for just this reason.  After all, even a broken clock is right some of the time.   



Novel Ways to Revoke a Will


Each new Last Will and Testament automatically revokes the old one. But can a Will be revoked without executing a new one? Absolutely, and some ways of revoking a Will in Maryland may surprise you.

Destruction - A Will is revoked by "burning, cancelling, tearing, or obliterating" it. If a Will is found only partially burnt or partially torn, it can become tricky to decide whether this reflects an intent to revoke or just normal wear and tear. A person can revoke particular parts of a Will merely by crossing them out, but no replacement text can be inserted without going through all the formalities of re-executing the Will (including two witnesses).

Misplacement - If the original Will cannot be found, it is presumed to have been destroyed by the testator and revoked. Even if there is a copy of the Will, the copy is not valid unless either (1) there is evidence to demonstrate that the testator did not revoke the original or (2) all the beneficiaries agree that the copy should be treated as a valid Will.

Marriage AND Children - A spouse has the right to take a portion of the deceased spouse's estate regardless of what the Will says, but marriage itself does not revoke an earlier Will. It takes a combination of marriage AND the addition of new child to revoke a premarital Will. The addition can be by birth, by adoption or even by legal recognition of a child born before the marriage. But just to make things more confusing, revocation only occurs if the child (or a descendant of the child) outlives the parent with the premarital Will.

Divorce - Divorce revokes a Will, but only with respect to those parts of the Will "relating to" the spouse. The same is true with an annulment. But this rule will not apply if the deceased spouse indicates otherwise in his Will or in the divorce decree.. Even though a Will never goes stale by the mere passage of time, the unexpected ways in which a Will can be revoked are part of the reason why it is a good idea to review your estate plan every 3 years.


Click the link provided in case you missed out last blog post titled  Why Turning 69 1/2 is an Important Date for Your IRA


 Our Founding Member, Jane Sims, will be sworn in as a member of the Virginia Bar in September and has applied to the Pennsylvania Bar.
Cristina Lujan, a valued Paralegal at our firm, has recently started her final year at the University of Baltimore Law School. Congratulations Cristina!
David Forrer, Estates and Trust Attorney, just finished his stint as an actor by performing in the local production of " As You Like It" by The Baltimore Shakespeare Factory.
We thank you for your business and support for our firm.  Feel free to call us at 410-828-7775 with any estate planning questions or concerns, and as always we are most grateful for your referrals.  


Thank you,
Jane's Jane

Jane Frankel Sims
Founder/Managing Att orney

The Law Office of Jane Frankel Sims


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