In August of 2014 Ernie dies of old age. Ernie was an oil wildcatter who left a fortune valued at $20 million at the time of death, mostly in the form of working interests in oil wells. He leaves behind a wife, Wendy, and a daughter, Donna (Wendys stepdaughter). Wendy and Donna do not get along well. Donna thinks Wendy married Ernie only for his money. Wendy thinks Donna is spoiled. Ernie and Wendys state of residence gives the surviving spouse an elective 50% share of the estate of any married decedent regardless of what the will says. Donna has a handwritten will on a napkin, from the last time she took Ernie out to dinner, that says: I hereby leave all my worldly goods to my beloved daughter Donna. Signed, Ernie

Donna comes into your office with Wendy. They want to know what the estate tax will be under 2014 law if Wendy gets all of the money and what the estate tax will be if Donna gets all of the money. They are currently suing each other in probate court.

1. What are the consequences if the two parties reach a settlement?

2. Do you have a conflict of interest in representing both Wendy and Donna as clients?

3. Between August 2014 and February 2015, crude oil prices fell by nearly 50%. This would have affected the value of Ernies wells by a substantial amount. Lets assume he was only worth $10 million at the alternative valuation date. How does this change the estate tax consequences for Wendy and Donna?

**Assume that Ernie has never used any portion of his unified credit.**