Estate Taxes Are Always A Consideration In Estate Settlement

The executor or administrator of a New York estate is required to consider many factors when administering an estate. One of the items that the fiduciary needs to review is whether estate taxes need to be paid.

In the year 2017 the Federal Estate tax exemption is $5,490,000. New York State also imposes an estate tax and the 2017 exemption after April 1, 2017 is $5,250,000. While many estates appear not to be subject to the tax, it is necessary that all of the decedent’s assets be properly valued in order to avoid a possible claim by the taxing authorities that a tax or additional tax must be paid. The estate tax must be paid and a return filed within 9 months after the death of the decedent. While an extension to file the return can be obtained for 6 months, any non-payment or underpayment of the tax can result in the imposition of substantial interest and penalty charges. It is not unusual for the Internal Revenue Service or local tax authority to require an audit and to claim that estate assets have been undervalued. This is especially true with business interests and other hard to value assets such as artwork.For example, a major tax controversy has been ongoing with regard to Michael Jackson’s estate. A recent post in the by Eriq Gardner on December 8, 2016 entitled “Michael Jackson’s Executor, Manager Ordered to Testify in Billion-Dollar Tax Battle”, describes the current status of this battle. The post reports that in February 2017 a trial between Michael Jackson’s estate and the IRS is expected to take place to determine whether the estate is liable for hundreds of millions of unpaid estate taxes. The major topic of dispute concerns the value of the rights Michael Jackson’s estate has to exploit his image. The IRS claims the value of these rights, which are subject to taxation, is in excess of $400 million dollars. The estate has taken the position that the value is a little more than $2,000.00. In the event it is determined that the Jackson estate has undervalued this asset, there may be large interest and penalty charges due to late payment.

While most estates do not encounter the extreme complexity of Michael Jackson’s valuation, it is nevertheless important for all estate assets to be properly valued after a decedent dies.  These assets need to be reported in accordance with proper IRS standards and rules.

I work closely with clients who are estate administrators or executors to determine the assets that comprise a decedent’s gross estate for estate tax purposes. It should be recognized that even assets that are not controlled by a person’s Last Will such as joint assets or assets that have a designated beneficiary must be included in the estate tax calculation.  If you have a question regarding the settlement of an estate or estate tax, call me now for a free review.

New York City Trusts and Estates Lawyer Jules Martin Haas, Esq. has been representing clients in Probate and Estate Administration proceedings throughout the past 30 years. He is available to help residents in many areas, including Nassau, Suffolk and Westchester Counties. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation or e-mail me at


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