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Court Discusses Estate Taxes

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This case involves the estate of Mr. Frank Wolf. The petitioner is the administrator of the estate, Betsy Wolf. Ethel Wolf is the respondent.

The Estate

A New York Probate Lawyer said the case involves the will of Mr. Wolf. Most of his property was left to his mother, while nothing appeared allocated for his wife. There was also no mention of estate taxes.

The Arguments

The mother in this case argued that the wife should only be entitled to (at most) one half of the value of the estate after the taxes and expenses were taken care of. The wife feels that the taxes should not be taken from the total value of the estate and that she should receive half of the estate after debts expenses and the statutory exemption of the widow are applied. They are both referencing Subdivision 1 of Section 8 of the Decedent Estate Law. The widow maintains this law was created to ensure spouses received the equivalent of half of the estate without the application of property taxes. Other states have similar laws.

Because parts of the Decedent Estate Law and portions of the Internal Revenue Code and Tax Law appear to have some conflicts, there are contradictions which need to be clarified to make a decision in matters like these. According to the Decedent Estate Law, a spouse has the option to take their potion of the estate as in intestacy. This is the equivalent to half the estate after funeral and administrative costs are covered, plus $5000. However, this can’t exceed the total of half of the net value of the estate.

Queens Probate Lawyers said both the language of the laws themselves and the evidence found throughout prior case history leads to potentially conflicting information regarding the application of estate taxes to the widow’s share of the estate. However, after careful review of all the available information the court decided that the widow’s fair share was half of the estate after debts, funeral expenses, administration costs and a prorata share of the estate taxes that apply, although the taxes can potentially be reduced through certain applicable exemptions and marital deductions.

An amount of $64,290.52 from an insurance policy is part of the taxable estate. Both parties agree that this amount should not be included when calculating the total value of the estate subject to election by the widow. However, the decedent’s mother asserts that this amount from the insurance policy needs to have the applicable taxes subtracted from the estate before that right of election can be asserted. Bronx Probate Lawyers said the widow, on the other hand, claims that any taxes based on her interest in the insurance policy should only be subtracted from the insurance fund’s corpus. Basically, the widow wants a situation where the amount of property that she can receive won’t be reduced by taxes.

The taxing authorities had not, to this point, received any estate tax returns. This means that the court can’t look at the taxes to determine whether or not the actions taken by the widow were done correctly when figuring out how much tax needed to be paid, and how much tax needed to be deducted from the insurance fund and not the total portion of the estate. According to the statutes found in paragraph 1, subdivision E and subdivision E of section 812 in the Internal Revenue Code, as well as the applicable portions of section 249-s of the Tax Law, the amount of the estate that will transfer to the widow needs to have the amount subtracted from it equal to any applicable estate, inheritance, succession or legacy taxes.

Results

The court settled on approving the method for assessing taxes that the widow wanted to apply to the estate. However, a stipulation was added that the taxing authorities need to assess the taxation on the insurance fund at a later date, and the effect that this has on the total estate may require later modification.

Stephen Bilkis & Associates offers legal services throughout the metropolitan area of Manhattan. If you find yourself in need of legal advice, or are involved in an estate litigation matter, you may contact one of our offices to set up an appointment for your free consultation. Our lawyers will help you determine what your best course of legal action will be based on your current situation.

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