CA T&E 1/4’ly article ignores Clayton Election

I just received my California Trust & Estates Quarterly, Spring issue. (It’s now late Fall actually, but the section promises to catch up!)

There is an article entitled “To Bypass or Not Bypass, That is the Question: Using a Formula General Power of Appointment Clause to Address New Estate Planning Uncertainties” which does a pretty good job of outlining current planning uncertainties but then goes on to say that “three possible solutions may exist.”

The “three possible solutions” mentioned are: 1) Disclaimer Trust, 2) Opt-In General Power of Appointment, and 3) Formula General Power of Appointment.

No mention is made of the Clayton election as a possible solution, though the article cursorily dismisses one-lung QTIPs:

“…creating a QTIP Trust and a Survivor’s Trust would complicate the estate plan and require special drafting since most traditional estate plans maximize the amount passing to the Bypass Trust first and then only transfer any excess of the Decedent’s share to a QTIP Trust. In this case, the funding formula would need to be adjusted.” 

Though the article considers QTIPs complicated, its proposals for giving the surviving spouse a general power of appointment over the bypass trust are not exactly models of simplicity.

Ironically, a huge display ad for WealthCounsel appears prominently within the article.  The WealthCounsel network of attorneys (I’m a member) has pioneered use of the Clayton election.

To consult with a California attorney on these issues, visit http://SacredHonor.US


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