C:13-64 Your long-time client, Harold (Hal) Holland will meet with your supervising partner next week for an estate planning appointment. Hal has been married to Winona Holland for 25 years. Hal is age 68 and retired. Winona, age 60, retired early to spend more time with Hal. They are residents of Topeka, Kansas. Hal is a U.S. citizen, and Winona is a citizen of Australia. Winona has indicated she plans to return to Australia if Hal predeceases her. Your supervising partner has requested that you identify any potential pitfalls in Hals current estate plan so she can bring them to his attention.

Hal has stated that, in addition to providing some wealth transfers to his wife Winona, he wants to treat his three children by his prior marriage (Gina, Halbert, and Julianna) approximately equally in terms of total wealth received from him by gift plus as a result of his death.

Hal and Winona prepared and submitted via e-mail the list of assets shown below.

Principal residence in Topeka titled in the names of Hal and Winona, joint tenants with right of survivorship; purchased with $280,000 of consideration furnished solely by Winona; fair market value of $400,000.

Household furnishings in the Topeka house; fair market value of $34,000. Winona owned almost all of these furnishings before she married Hal.

Portfolio of publicly traded stocks in Hals name; fair market value of $18 million.

Mountain cabin and land in Vail, Colorado. Hal purchased the property in 1998 for $60,000; fair market value is $460,000. Hal never visits the cabin, but son Halbert spends every summer and several weeks during the winter at the cabin.

Stock (12 shares) in Harolds Hammocks, Inc. (a closely held C corporation) transferred to the Oz State Bank Revocable Trust in 1992; fair market value of $226,000, and basis of $15,000. Hal acquired the 12 shares in 1988 in a Sec. 351 transaction. Daughters Julianna and Gina own the remaining stock, 44 shares each, which Hal gifted to them in 2010.

Individual retirement account at ToKan State Bank. The account consists of the funds rolled directly into the IRA from the non-contributory qualified retirement plan of Hals former employer when Hal retired. Fair market value of the IRA is $540,000. He is the IRA beneficiary, and Winona is the contingent beneficiary if Hal predeceases her. Hal has not yet received any distributions.

Cash of $825,000 in checking and savings accounts in Hals name.

Mutual fund shares in the names of Hal and daughter Julianna, joint tenants with right of survivorship. Hal provided all the consideration ($9,000); fair market value of $64,000. He intended to use the money to help finance Juliannas education, but she received a full scholarship.

Stock in Dolrah, Inc. (a firm that elected S corporation status in 1990 upon its formation). The stock is in Hals name, and he is one of six stockholders; fair market value of his shares was $5.8 million.

Hals current will reads as follows:

To my wife, Winona, I leave outright $500,000 of stock from my portfolio of publicly traded stocks, and all of my stock in Dolrah, Inc.

To my grandchild, Halbert, Jr., I leave $5,750,000 of publicly traded stock from my portfolio.

I leave the rest of my estate outright in equal shares to my children, Gina, Halbert, and Julianna.

Required:

Prepare a memo to your supervising partner to help her prepare for the appointment with Hal. In the memo, advise the partner of any pitfalls (problems) you have identified that she should discuss with Hal. You need not make any calculations of estate tax liabilities.