Legal Question in Wills and Trusts in Iowa

Re: inheritance

Grandfathering is a term that is used to describe what positions will be protected by a subsequent change in the law. In many case, if a will provision is treated in a certain tax manner under the law when the Will was written, that treatment will prevail even though the law is subsequently changed.

Let me give you an example. Taxable gifts to grandchildren in excess of $1,000,000 are now subject to a 55% generation skipping tax. However, if the gifts flow from an irrevocable trust created prior to September 25, 1985 the distribution of the gifts today would not be subject to the generation skipping tax.

The pre September 25, 1985 trust is said to be grandfathered because it is covered by the then existing tax law and not the law that became effective subsequently.

There are lots of examples of grandfathering in many contexts, such as land use, but I hope you get the idea.

Will which leaves very little to the children and a lot to the grandchildren may be described in many ways, such as, good tax planning, confidence that the children can take care of themselves, selfishness, disappointment and anger, but not grnadfathering.