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Court Orders Administrator To Elect Portability

The following was written by Luke Lantta of Bryan Cave’s fiduciary litigation team and originally posted here

When the IRS enacted the portability election provisions in 2011, which allowed estates of married taxpayers to pass along the unused part of their estate and gift tax exclusion amount to their surviving spouse, it remarked that it “expect[ed] that most estates of people who are married will want to make the portability election. . . .”  But, to elect portability, an estate tax return must be filed in order to pass along the exclusion.  So, what happens when an executorrefuses to elect portability?  Take them to court, of course.

NO AUTOMATIC CLOSING LETTER, BUT WAIT – THERE ARE ALTERNATIVES

IRS Notice 2017-12

The Service issued FAQs in June of 2015 to let practitioners know that they were no longer routinely issuing closing letters. The Service instructed practitioners that they would now have to request such a closing letter, but could not do so until 4 months after filing the estate tax return. Their goal was to reduce the amount of work the Service needed to complete as a cost cutting measure. However, taxpayers need closure and the requests for closing letters almost became routine. Because so many practitioners were routinely requesting closing letters, the Service let it be known informally, with a posting on its website, that a transcript could be requested, and would be an acceptable substitute for an estate tax closing letter. But requesting such a transcript has not been a simple matter, with many groans of frustration along the way. The Service has now provided guidance

Recent Tax Court Case Rules on Treatment of Madoff Account

Recent Tax Court Case Rules on Treatment of Madoff Account

October 3, 2016

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

In a recent Tax Court decision, Harry H. Falk, and Steven P. Heller, Co-Executors, v. Commissioner of the Internal Revenue, the United States Tax Court ruled that in the case of the Madoff Ponzi scheme, an estate which paid estate tax on Madoff assets which subsequently have become worthless can claim a theft deduction.

James Heller, a New York state decedent, died in January 2008 owning a 99% interest in James Heller Family, LLC (the “LLC”).  The only asset held by the LLC was an account with Bernard L. Madoff Investment Securities, LLC.  In November of 2008, the Executors of Mr. Heller’s estate withdrew some money from the LLC’s Madoff account in order to pay estate taxes and other administrative expenses.  Shortly thereafter, the news of the Madoff Ponzi scheme became public. Suddenly, the LLC’s interest and the estate’s interest in the LLC became worthless.

In April 2009, the Executors

IRS: Transcript Can Be Alternative to Estate Tax Closing Letter

Back in August, we wrote about how the IRS would no longer automatically issue closing letters for filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Returns.  Instead, the IRS will only issue closing letters upon request by the taxpayer.

However, on December 4, the IRS updated its Frequently Asked Questions on Estate Taxes website to provide estates with an alternative to requesting and obtaining an IRS closing letter:

“Account transcripts, which reflect transactions including the acceptance of Form 706 and the completion of an examination, may be an acceptable substitute for the estate tax closing letter.”

Further, transcripts are easily available:

“Account transcripts are available online to registered tax professionals using the Transcript Delivery System (TDS) or to authorized representatives making requests using Form 4506-T.”

Changes in the Final Portability Regulations

Changes in the Final Portability Regulations

July 10, 2015

Authored by: Andrew Bleyer and Doug Stanley

ThinkstockPhotos-176603977The IRS issued final regulations for electing portability and use of a deceased spousal unused exclusion amount (DSUE) on June 12, 2015. Though the final regulations are fairly technical, they are worth understanding as applying them correctly can mean a $5,430,000 difference in the amount that passes through an estate tax free. The final regulations adopt the temporary regulations that were issued in 2012, with several changes and clarifications:

1. Upon request, the proposed regulations allowed for an extension of time to elect portability for those estates that did not meet the requirements for an automatic extension. It was unclear whether estates that exceed the basic exclusion amount (currently $5,430,000 indexed for inflation) could request such an extension because the filing deadline for such estates is prescribed by statute and thus cannot be modified

Treasury Green Book Proposal: Definition of Executor

459482489The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 206 of the Green Book and is re-printed here for your convenience:

EXPAND APPLICABILITY OF DEFINITION OF EXECUTOR

Current Law

The Code defines “executor” for purposes of the estate tax to be the person who is appointed, qualified, and acting within the United States as executor or administrator of the decedent’s estate or, if none, then “any person in actual or constructive possession of any property of the decedent.” This could include, for example, the trustee of the decedent’s revocable trust, an IRA or life insurance beneficiary,

Treasury Green Book Proposal: 6166 Extensions

459482489The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 202 of the Green Book and is re-printed here for your convenience:

EXTEND THE LIEN ON ESTATE TAX DEFERRALS WHERE ESTATE CONSISTS LARGELY OF INTEREST IN CLOSELY HELD BUSINESS

Current Law

Section 6166 allows the deferral of estate tax on certain closely held business interests for up to fourteen years from the (unextended) due date of the estate tax payment (up to fourteen years and nine months from date of death). This provision was enacted to reduce the possibility that the payment of the estate tax liability could

Celebrity Family at War Over Estate

Celebrity Family at War Over Estate

February 6, 2015

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

The untimely death of Robin Williams shocked and distressed many of his admirers. Now six months after his death many of his admirers are further distressed by the legal battle between Williams’s widow and his children from prior marriages.

Mr. Williams seems to have gone to great lengths to care for and protect his three children from two different marriages. Yet, he also made provisions for his wife. His home in Tiburon, California, along with its contents, subject to certain reservations, was to pass to his wife on his death. However, the trust which, according to news sources, disposes of this home and its contents also provides that his children are to receive his clothing, jewelry and personal photos taken prior to his last marriage as well as his “memorabilia and awards

Good Faith & Probable Cause Defeat Forfeiture Under No Contest Clause

177855670When a will contains a so-called no contest clause or in terrorem clause that would cause a beneficiary to lose his or her interest in the deceased’s estate in the event the beneficiary contests the validity of the will, the court is often called upon to determine whether to enforce the forfeiture against the beneficiary if he or she loses the will contest. Just such an issue faced the Mississippi Supreme Court in Parker v. Benoist.

In this case, Bronwyn Benoist Parker (“Parker”) filed a will contest, contesting the validity of her father’s 2010 will. The 2010 will changed the disposition of the father’s estate from an equal division between Parker and her brother, William Benoist (“Benoist”), to a disposition where Benoist received a significantly greater portion of their father’s estate and Parker

Casey Kasem: The Countdown (of Estate Planning Lessons) Rolls On

casey-kasem-reuters-208x300More than a month after his death at age 82, Casey Kasem’s body still has not been buried and now is missing from the Washington state funeral home where it was being held, according to a recent statement from the publicist for his daughter, Kerri Kasem.

Kasem’s body disappeared around the same time that Kerri Kasem was granted a temporary restraining order she sought to prevent Casey Kasem’s second wife (and the step mother of three of his four children, including Kerri), Jean Kasem, from cremating Casey’s remains or removing them from cold storage. Kerri was seeking a court order allowing Kerri to obtain an autopsy of her father’s body. Kerri has stated that in light of threats by Jean to sue Kerri for elder abuse and wrongful death she is concerned about how the results of any autopsy that Jean

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