The Happiest Tax Advice Ive Ever Given
I suspect that I know what youre thinking. Youre probably wondering how can the words happiest and tax show up in the same sentence, much less right next to each other. Im kind of surprised myself, but, as I like to say, life is long and you never know whats going to happen.
When I tell folks who come to my seminars that estate planning is really life planning, Im aware that they dont always catch on at first, but believe me, its true.
And heres an example of how
A number of years ago a lady came to see me. She was a pleasant, well-mannered woman of a certain age (and I didnt ask how old because I didnt really need to know, and besides, unless my work requires that I know, Ive learned through the years that Its Not Nice To Ask That Question to a Lady).
She told me that the Special Man in her life was dying, and that he probably had no more than a few weeks, if that, to live. I call him her Special Man because no, they werent married. They met about forty years previously, and had shared all the poorer and richer and the health and, now, sickness) together; they had even bought a house together–all without that Piece of Paper that Baby Boomers, Generation Xers and Generation Yers at least talk about when they become couples.
Although his will and health care documents were all in order, she asked me whether there was any estate planning that could be done, while there was still some time left.
I immediately thought about the Pennsylvania Inheritance Tax Law. In Pennsylvania, a spouse is not taxed on marital property when her (or his) spouse dies. On the other hand, because we have no common law marriage in the Keystone State, when one of two, unrelated joint owners of property dies, the decedents share is taxed at the highest rate, which is 15 percent. Bottom line: the Inheritance Tax people would look upon this Lady and her Special Man as total strangers, regardless of all the life and love they had shared, and would assess a 15% inheritance tax on half of their house upon his death.
The clock on her sweethearts life was ticking downthere was only one piece of advice I could give her:
They had to be married at once!
When I gave her my advice, this otherwise sad woman, who was already bone weary from the around-the-clock care she had been giving Sweetheart at their home where shed brought him to spend his last days, began to laugh. It seems that Sweetheart had proposed to her on so many occasions while they had been together that she had lost count. It was she who always had the Cold Feet. And now, taking the plunge seemed to be the only right thing to do (and besides, it made good tax sense).
We wasted no time in helping her make the arrangements, since we were on a Life and Death (and Tax) Mission. The County Clerks Office was terrific. Sensing the urgency, they dispatched a Wedding Registrar to the home the very next day to take the marriage license application, since Sweetheart was too ill to leave the house. And because these were extreme circumstances, the County Clerk waived the three-day waiting period.
The couple had a friend who was a clergyman. Ladys sister and Sweethearts brother served as legal witnesses and there, in their living room, with Sweetheart in his pajamas, tethered to an intravenous pole, he and his Lady were married. My wife, who is also my law partner, observed with her typical but wonderfully dry Irish sense of humor that it was the most unusual shotgun wedding that she had ever heard of.
And about a week after the wedding, with his wife at his side, Sweetheart quietly passed away, a Happily Married Man, having known the joy of marrying the love of his life before he died. And Lady had an inheritance tax bill of zero.
Im told that Sweethearts brother stopped at a McDonalds on the way to the wedding to buy a big box of Chicken McNuggetsone of his brothers favorite foods–for the Wedding Reception.
I wish that I had been there.