SB 670

The federal estate tax, which includes provisions related to the

generation-skipping tax, was repealed for calendar year 2010 only. This bill

addresses the administration of wills and trusts of decedents who died in calendar

year 2010 that were created in the expectation that the federal estate tax would

continue in 2010.

Under the bill, if the will or trust of an individual who dies in calendar year 2010

includes a formula that disposes of certain of the decedents property by reference to

the federal estate tax, the federal generation-skipping tax, or both, the will or trust

will be administered as if the provisions of the federal estate tax and federal

generation-skipping transfer tax were in force just as they were on December 31,

2009. However, the bill provides exceptions from that treatment, allowing the

applicable exclusion amount for decedents' estates and the federal

generation-skipping transfer tax exemption to be considered unlimited, if all of the

following circumstances apply:

1. The decedent is survived by a spouse.

2. If the decedent is survived by issue, all issue of the decedent are also issue

of the surviving spouse.

3. The surviving spouse is a current income beneficiary of each trust funded in

whole or in part by the formula, or the sole beneficiary of any other property subject

to disposition by the formula which does not pass in trust.

Under the bill, a personal representative of the decedent's estate, trustee, or

beneficiary of the decedent's trust or will, or surviving spouse may petition the circuit

court to allow the formula for distributing the decedent's property to be applied in

a manner different from that described above. The bill allows the court to consider

the overall dispositive plan of the decedent, the tax implications of an alternative

disposition, and the decedent's intentions, when determining how to respond to that

petition.