Legal Question in Tax Law in New York

Estate Tax from ''Bankrupt'' Estate

I'm 1 of 4 legatees of a $1.3 million NY estate. In the Will, I was nominated Executor but have NOT SOUGHT APPOINTMENT by a court. The decedent held all his assets in TOD or JTWROS form so they passed by operation of law. (He only owned financial accounts. No real estate or other assets.) There's a $55K NY estate tax but no probate assets. The Will states that no legatee shall be responsible for any taxes -- these are to be paid from the estate. 2 of the 4 legatees are refusing to pay any share of the taxes. I had been seeking ways to obtain safe harbor so the other 2 only pay their fair share. Now a friend (MA lawyer) suggested we not file any tax forms nor pay any taxes. The logic is that beneficiaries don't owe taxes-the estate does & it's bankrupt. He gave me a few hypos such as an executive with few assets who leaves a large company-paid (taxable) insurance policy to a named beneficiary. Supposedly the government would not go after the beneficiary. Likewise, if a person who gave away his assets to save people from losing their homes to foreclosure, the government would not seek taxes from the donees-they're solely the obligation of the insolvent donor. Is non-payment a sound approach? Else how can someone pay only his share?


Asked on 12/08/08, 12:59 pm

1 Answer from Attorneys
Norman Nadel Norman Nadel, Esq.

Re: Estate Tax from ''Bankrupt'' Estate

Bad advice from Massachusetts.The recipients of the property which is transferred by operation law are, based on the facts you describe, responsible for the payment the New York estate tax. Each one of the recipients is responsible for filing the estate tax return. Failure to file the tax return and the failure to pay the tax can bring about very, very substantial penalties.

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Answered on 12/08/08, 2:28 pm


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