The U.S. District Court in the Southern District of Georgia has held that an ex-spouse beneficiary is required to pay a proportional amount of the estate tax relating to the life insurance proceeds that she received. In Smoot v. Smoot Thomas Smoot III sued his father’s ex-wife, Dianne Smoot, after she refused to pay a proportionate share of the estate tax. The estate of the decedent Thomas Smoot II has a gross worth of about $7.7 million. Dianne was the beneficiary of several life insurance plans. IRC Section 2206 permits the estate to recover from beneficiaries of life insurance the portion of estate tax related to the policy unless the decedents will expressly states otherwise. Mr. Smoot’s will did not state otherwise so the Court held Dianne liable for that portion of the tax.
See David A. Handler and Alison E. Lothes, Tax Law Update: June 2015, Trusts & Estates, May 27, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
