Charitable gifts reduced by proportional share of state and federal estate taxes

In Hale v. Moore, No. 2005-CA-001895-MR & 2006-CA-000662-DG, 2008 WL 53871 (Ky. Ct. App. Jan. 4, 2008), involving the estate of Claudia Sanders, the widow of Kentucky Fried Chicken founder Colonel Harland Sanders, the court required charitable beneficiaries (two colleges) to have their shares burdened by a proportional amount of state and federal taxes.

The court explained that Kentucky law does not exempt charitable gifts from being subject to reduction for transfer taxes unless the will expressly provides otherwise.  The will did not contain any specific language that the gifts to the colleges were to receive special treatment or be exempt from taxes.