New Case on Estate Valuation

A New Jersey appellate court has overturned the Tax Courtdecision of Estate of Theodore Warshaw v.Director, Division of Taxation, which held the Estate was entitled to arefund of estate taxes based upon post-date of death circumstances, namely Bernie Madoff’s Ponzi scheme.  This scheme made a once valuable IRA worthless, thus reducing theEstate’s value below the state’s estate tax exemption threshold.

The appellate decision found “that the Tax Court judge hadmisapplied the law and made unsupported factual determinations.”  The New Jersey Appellate Division held thereto be no basis to question the IRA’s date of death value, confirming theprinciple that an estate should be valued at the decedent’s death based only onknown or reasonably foreseeable facts at that time.

See Vincent E.Gentile, Matthew Barndt, Karen A. Denys, John Mitchell, & Monica Wahba, Madoff’s Victim’s Estate Not Entitled to TaxRefund on Alleged Worthless Asset, Lexology, July 2, 2013.