From The Boston Tax Institute
Lu Gauthier has given me permission to reproduce his email blasts. This one is a catch-up, so it is on the long side. Future posts in the series will be more focused....
Estate Intended For Charity Depleted By Litigation And Income Tax
The cautionary tale here is probably more about taking into account family issues and contingencies in estate planning for even relatively modest estates. Reading the state court decision, it appears that planning was done on the assumption that Ms. Belmont was going to outlive her brother and the implication of his being potentially made homeless in the event of her earlier death was not thought through.
What is really annoying about the outcome in this case is that the final return of the estate will pass through a useless deduction for administration expense to the charity. There is something odd about this mess ending up being a windfall for the treasury, but as Reilly’s First Law of Tax Planning goes – “It is what it is. Deal with it.”
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.