Settlement Agreements and Taxes

Sheets v. Palmer, 2005 WL 3403620 (Fla. Dist. Ct. Dec. 14, 2005), points out the importance of carefully negotating settlement agreements. 

Neither the testator’s will nor a settlement agreement resolving a will contest addressed the apportionment of estate taxes.  The court held that a $38,500 distribution to an estate beneficiary (characterized as a “bequest” in the settlement agreement) was subject to reduction under Florida’s tax apportionment statute.

For a more detailed discussion of this case, see Florida Probate Litigation Blog, Failure to Account for Statutory Apportionment of Taxes and Administrative Expenses Leads to Post Mediation Litigation, Dec. 19, 2005.

Special thanks to Scott A. Meyer for bring this case to my attention.