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In November 2008, I was hired to become the special tax counsel to two intertwined estates, trusts, and guardianships. My client became the Executor of the Estate of a Husband, his Wife, and the Wife’s Parents, upon the death of the husband in March 2008.
When I became involved, I was informed that the Estates were valued at between 25 and 40 million dollars and that the husband’s estate tax return was due…within 4 weeks.
The Estates consisted of mostly real estate (including a 75% of a multi-unit Brownstone, 10 single family homes, and a unique 14 acre parcel of property). Besides a projected 17 to 18 million dollars in federal and state estate taxes, there was an expected 10 plus million dollar income tax when the unique parcel was sold inside the C Corporation that held it, and an unpaid 1.7 million gift tax (plus interest and penalties) which resulted from a gift made by the Husband’s mother in 2002.
Adding to the complexity and issues, the 75% of the multi-unit Brownstone, the 10 single family homes, and 26% of the corporation that owned the unique 14 acre parcel of property, was still owned by the Wife’s Estate and the Wife’s Estate had never filed an estate tax return.
I was specifically retained to (1) defer payment of all estate taxes, (2) eliminate any estate or gift tax penalties, (3) and develop strategies for post-mortem estate tax planning to reduce the overall estate, gift and income tax burden on these estates.
Except for a Bypass Trust created under the Wife’s Will, there was no pre-death estate tax planning used by either the Husband, the Wife, or the Wife’s parents.
Using a unique blend of valuation techniques, valuation discounts, penalty waiver requests, and audit strategies, the expected estate, gift, and income tax burden (including interest and penalties) of 28 or more million dollars was reduced to 7 million dollars, with minimal interest charges and NO penalties.
The attached video, “A Real Life Story of Death and Taxes,” explains this incredible case, including the unique techniques used (that accomplished this 20 plus million dollar tax savings) and how these techniques could and should be used in pre-death planning to achieve similar results in multi-million dollar taxable estates.
- Gary Altman, Esq.