Wills & Revocable Trusts — Should tax apportionment rules be unified?

Ira Mark Bloom (Justice David Josiah Brewer Distinguished Professor of Law, Albany Law School) recently authored an article entitled Unifying the Rules for Wills and Revocable Trusts in the Federal Estate Tax Apportionment Arena: Suggestions for Reform, 62 U. Miami Rev. 767 (2008).

Here is an excerpt from the Introduction:

In 1984 John Langbein called for “a unified American law of succession.” He specifically referenced the area of estate tax apportionment: “The law governing the apportionment of estate taxes between probate and nonprobate assets has been moving strongly toward equal treatment of the two.” Professor Langbein also noted the position under a 1964 Uniform Act: “The Revised Uniform Estate Tax Apportionment Act apportions federal and state taxes among probate and nonprobate takers in proportion to their shares, unless the will contraindicates.”

Now almost twenty-five years later, “unification” of federal estate tax apportionment is almost complete. As will be seen in Part II.A, virtually all states have adopted the principle of apportionment, including five states that have enacted the latest Uniform version, the 2003 Uniform Estate Tax Apportionment Act. But from my perspective, true unification in the area of federal estate tax apportionment will be achieved only when American law places the revocable trust device, the functional equivalent of a will, on par with wills in terms of a decedent’s ability to change default apportionment rules. In effect, I am advocating for a change in mandatory laws that currently prohibit or limit a decedent’s options in changing default apportionment rules by revocable trusts.