VSCPA Supports HB 755 Related to Wills and Trusts

A personal letter to all members of the Senate Courts of Justice Committee  

Re: HB 755 (Janis)

 

To Whom It May Concern:

 

The Virginia Society of Certified Public Accountants (VSCPA) supports HB 755 related to wills and trusts, which addresses the consequences of repealing the federal estate and generation-skipping transfer taxes with respect to estates and taxable transfers occurring after December 31, 2009, and before January 1, 2011. The bill contains an emergency clause and its provisions would also be effective retroactive to December 31, 2009.

 

The repeal of the federal estate tax presents unique and complex challenges for executors and trustees (fiduciaries) by creating uncertainty regarding the interpretation of formula provisions in wills and trusts for decedents who pass away in 2010.  

 

For example, a will or trust may reference terms that are defined based on the federal estate tax law. However, the definition no longer exists if the tax concepts are repealed from the applicable law. Without federal tax laws, the fiduciary would look to state law for guidance regarding interpretation of the will or trust, and currently the Virginia tax code provides no guidance with respect to estate tax. 

 

Without proper guidance, the interpretations could result in extreme situations that were unintended by the decedent. For example, formula clauses could be interpreted in a way that could result in total disinheritance of certain individuals (i.e., the disinheritance of the surviving spouse, or conversely, the disinheritance of all individuals other than the surviving spouse).

 

The proposed bill provides a simple solution that defines tax terms for fiduciaries by referring to federal tax laws that were applicable before the repeal.

On behalf of its 9,000 members, the VSCPA urges you to support HB 384 to fix the gap in current law created by the absence of a federal estate tax. Thank you for your consideration and please do not hesitate to contact us if we can be of any assistance to you on this or any other matter facing the Commonwealth. 

 

Questions and concerns may be directed to VSCPA Government Affairs Director Emily Walker at ewalker@vscpa.com or (804) 612-9428.

 

Sincerely,

 

James K. Walker, CPA

Chair, VSCPA Board of Directors

 

Cc:      Delegate William R. Janis

            Bill Axselle

            Travis Hill

 

 

LAST UPDATED 2/19/2010

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