1. Spouses may merge their estate tax exemptions through transfer. According to the American
College of Trust and Estate Counsel (ACTEC), it refers to a procedure whereby a surviving spouse
may take control of and use the unclaimed estate tax credit of a dead spouse. Because of this, the
surviving spouse enjoys two exemptions from estate taxes: the spouse's own claim plus the leftover
exemption of the passed-away spouse. The exemption amount for estate and gift taxes is $5.6
million per person in 2018, compared to $5.49 million in 2017. The Tax Cuts and Jobs Act (TCJA)
doubled the exemption level, up to $11.18 million in 2018, with inflation adjustments. Following the
2018 estate tax rules, a Donna’s estate would be free from federal estate tax up to a maximum of
$11.18 million, with a 40% top estate tax rate. This indicates that no federal estate or gift tax is due
when a person leaves $11.18 million to their children.
2. If Wendy and Donna agree, Ernie's money would probably be having an equal share, maybe in a
way that deviates from the conditions of Ernie's agreement. Both parties must agree on the
agreement's conditions, and the probate court supervising the case would probably accept them as
well. They must stick by the settlement terms, which will specify how the estate is divided between
them, after it has been negotiated and authorized.
3. Since Wendy and Donna have conflicting interests in the probate court case, there is indeed a
conflict of interest when managing both as clients. In contrast to Donna, who wants to fight the
estate's distribution and take all the money following the handwritten will, Wendy is interested in
establishing her right to the elective 50% portion of the estate as the surviving spouse. As a lawyer,
it is crucial to prevent conflicts of interest and unbiasedly defend each client's interests. According to
the ABA groups, Rule 1.7: Conflict of interest: Current clients, if there is an immediate conflict of
interest, the attorney is not permitted to represent the client (American Bar Association).
4. According to the State estate tax 2018 law where the family lives, the surviving spouse will
receive half of the deceased spouse's assets. This indicates that Wendy will receive $5 million from
Earnie’s substantial amount, which was $10 million. While the 2018 estate law also states that the
children of the deceased will receive the entire estate worth $10 million, and the estate would
receive the whole $11.18 million credit to apply as an estate tax offset because Ernie never utilized
any of his unified credit. As a result, no federal estate tax would be owed.
References:
What is portability for estate and Gift Tax? Portability of the estate tax exemption. Retrieved April
27, 2023, from https://www.actec.org/estate-planning/portability-estate-tax-exemption/
What to expect after hiring an attorney. Retrieved April 27, 2023, from
https://www.actec.org/estate-planning/hiring-an-attorney/
Estate and gift tax faqs. Retrieved April 27, 2023, from https://www.irs.gov/newsroom/estate-and-
gift-tax-faqs
Rule 1.7: Conflict of Interest: Current Clients. Retrieved April 27, 2023, from
https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_prof
essional_conduct/rule_1_7_conflict_of_interest_current_clients/
