Steve Akers, Managing Director at Bessemer Trust, provides the following summary of Keller v. U.S., 106 AFTR 2d 2010-XXX (S.D. Tex. September 14, 2009) and 106 AFTR 2d 2010-XXXX (S.D. Tex. September 15, 2010):
These opinions address the amounts of deductible administration expenses, following the court's initial opinion on August 20, 2009 recognizing the deemed funding of a partnership before death and deemed borrowing of partnership assets for estate taxes and administration expenses (even though the estate taxes had actually been paid by the revocable trust before realizing that much of the trust's liquid assets really belonged to the partnership).
Highlights of the opinions include:
-Interest on the deemed borrowing from the partnership is deductible;
-Contingent accounting and legal fees paid pursuant to contingency fee arrangements entered into after the court's initial opinion were not deductible (based on a finding that those additional fees were not "necessary");
-Executor fees paid to family members who performed no services were not deductible (but were treated as disguised distributions to beneficiaries; the court observed that they were "a perfect split based upon their lineage");
and
-Maintenance expenses are deductible until the determination of the estate's tax liability and final settlement of the estate.
Please click here for a more detailed discussion of the Keller case.
Posted by James G. Haskell, Senior Associate Editor, Wealth Strategies Journal.
These opinions address the amounts of deductible administration expenses, following the court's initial opinion on August 20, 2009 recognizing the deemed funding of a partnership before death and deemed borrowing of partnership assets for estate taxes and administration expenses (even though the estate taxes had actually been paid by the revocable trust before realizing that much of the trust's liquid assets really belonged to the partnership).
Highlights of the opinions include:
-Interest on the deemed borrowing from the partnership is deductible;
-Contingent accounting and legal fees paid pursuant to contingency fee arrangements entered into after the court's initial opinion were not deductible (based on a finding that those additional fees were not "necessary");
-Executor fees paid to family members who performed no services were not deductible (but were treated as disguised distributions to beneficiaries; the court observed that they were "a perfect split based upon their lineage");
and
-Maintenance expenses are deductible until the determination of the estate's tax liability and final settlement of the estate.
Please click here for a more detailed discussion of the Keller case.
Posted by James G. Haskell, Senior Associate Editor, Wealth Strategies Journal.
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