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Estate and Trust Administration

In a sense, the specter of possible litigation overhangs both estate planning and the administration of estates and trusts. Among the objectives of proper planning and administration is the avoidance of litigation.

Our Trusts and Estates department has extensive experience representing banks, trust companies, and individuals serving as executors or administrators of a decedent's estates and as trustees under living trust agreements and wills. A complete team of attorneys, paralegals, and accounting clerks work together to produce the maximum efficiencies in advising and assisting the fiduciary with the administration of estates and trusts. Traditionally, we represent the fiduciary from the inception of the matter through termination and distribution of the trust or estate.

Thus, we supervise and/or prepare the necessary tax returns and documentation to resolve any and all issues involving creditors, tax agencies, claimants and beneficiaries and where necessary conduct appropriate proceedings in Surrogate's Court, Supreme Court and the U.S. Tax Court. We advise clients with respect to various tax elections and post-death tax planning steps such as qualified disclaimers.

Questions you should be asking:

The attorneys at Cullen and Dykman can answer these questions and more. 

A case in point:

In some instances, it is advantageous to incur estate taxes in the estate of the first spouse to die in order to save the total estate tax incurred in both estates when the second spouse dies. Such considerations are part of the techniques of post-mortem estate planning that must be a part of your counsel’s arsenal.

One case with which we are familiar serves to illustrate this point. The husband died in 2000 with an estate of $5,000,000.00. His will bequeathed $675,000.00 to his daughter and the remainder to his wife. This resulted in a zero federal estate tax liability in his estate because his surviving spouse enjoyed an unlimited marital exemption for assets that passed to her and the testamentary gift to his daughter matched the then current amount that could pass free of federal estate taxation. The wife died later that same year with a taxable estate consisting of the $4,325,000.00 from her husband, which was bequeathed to the daughter. The federal estate tax on the wife’s estate would have been $1,799,000.

If, however, the wife’s personal representative had filed a timely qualified disclaimer [called a “renunciation” under New York law] of $1,825,000.00 in the husband’s estate [having sought court permission for this purpose], the husband’s estate would be deemed to pass $2,500,000.00 to the wife’s estate and $2,500,000.00 to his daughter. Under those facts there would be federal estate tax in the husband’s estate tax on the $2,500,000.00 passing to the daughter in the amount of $ 805,250.00. Now the wife’s estate is not the original $4,325,000.00, but the amount not disclaimed, or $2,500,000.00. The federal estate tax on her $2,500,000.00 would also be $805,250.00, for a total estate tax in both estates of $1,610,500. This is $178,500.00 less than the $1,799,300 of estate taxes in W's estate had there been no disclaimer. The reason for the savings realized by equalizing the two estates is the increased marginal rates of taxation for larger estates under the Internal Revenue Code.

This is not to say that this tax saving solution would be appropriate in every case. There are often considerations which trump estate tax. What it illustrates is simply one set of issues entailed in post-mortem estate planning.