For a lot of our Harrisburg readers, there is nothing more important than making sure that their estate is perfectly accounted for and ready for their passing. That's because our readers know the importance of properly preparing an estate plan so as to avoid legal complications down the road. But as an out-of-state case will show, even the most meticulously planned estates can encounter complex legal issues, especially if the IRS misunderstands what is going on with your estate.
We can show this by using the case of a Texas tycoon whose estate was slapped with a $40.6 million bill for unpaid taxes between 2005 and 2008. According to the IRS, his estate owes the money because of valuable artwork that was allegedly transferred to his possession before his passing. But according to the man's widow, such a transfer never occurred.
"There is not a single bill of sale, sales slip, invoice, purchase agreement, ownership transfer document, or anything else reflecting a sale or transfer of the art," explains the complaint that seeks repayment of the $40.6 million that was paid by the widow "under protest."
As our Pennsylvania readers know, when a person passes away, the federal government levies a tax against the estate that must be paid before the estate is distributed to heirs. But as this case shows, establishing the right estate tax amount can be difficult if the IRS misunderstands what is really going on with your estate. They might assess a higher tax if they believe that you have property in your possession that would increase the value of your estate. If no such property exists though, executors of a will may find themselves facing a steep bill they shouldn't have to pay.
In cases like this, the complexity of the law necessitates the need for skilled legal counsel. With larger estates, there could be a lot riding on a revised tax assessment, which is why many of our readers hope to see a fair resolution for the heirs in this case.
Source: Courthouse News Service, "Widow Fights $40 Million Taxes on Art," Cameron Langford, Feb. 3, 2015