New York Estate Tax Win Opens Floodgates for Millions in Refunds and Future Tax Savings

In the matter of the will of Evelyn Seiden, the court overturned the state’s 2014 tax on the marital trust established on her husband’s death in 2010, ordering a refund of $530,000 back to her estate. This quiet case could case upheaval for many New York trust and estates, as the parties could use similar arguments to receive equally large refunds and savings. The executor’s argument boiled down to this: New York cannot tax what the IRS cannot tax.

QTIPs usually allow tax deferral, as at the first spouse’s death, assets go into a trust for the lifetime of the surviving spouse, and is not taxed until it is included in the estate of the second spouse upon their death. But because of the one-year federal estate tax repeal in 2010 and the New York state estate tax laws, the Seiden estate lawyers argued that they could avoid including the value of the trust in the widow’s estate altogether.

Bruce Steiner, a New York estate lawyer who wasn’t involved in the case, notes that it potentially applies to not just surviving spouses of New Yorkers who died in 2010, but to others who filed only New York estate tax returns.

The state has until mid-November to appeal. And the legislature could amend the tax law to apply to future estates.

See Ashlea Ebeling, New York Estate Tax Win Opens Floodgates for Millions in Refunds and Future Tax Savings, Forbes, October 25, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.