Who Should Bear the Bite of Estate Taxes on Non-Probate Property
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Siegel, Mark R.
INTRODUCTION|As you begin to study the property transfer provisions in the will, you immediately detect a similar pattern. The initial articles of the will that you are reviewing make several different dispositions of property. One disposition is a general bequest of cash. Further, the preliminary articles bequeath personal property and thereafter devise the home. The final provision disposes of the balance of the property. Several hundred thousand dollars are owed in estate taxes. The estate tax bill is attributable not only to assets disposed of by the will, known as the probate estate, but also to assets passing outside of the will, or the non-probate estate. Will each asset be responsible for its pro rata share of the taxes, or will certain assets be relieved of the burden of taxation? How the tax liability is shared will undoubtedly create the potential for adversarial relations if certain beneficiaries receive their property free and clear of any pro rata share of tax liability while others bear more than their pro rata share. In this manner, one can readily see how an allocation of tax liability in the tax clause of the governing instrument is most properly viewed as a dispositive provision even if the tax clause is not technically a pre-residuary or residuary disposition. A long standing tradition exists in this country to impose a tax on property held by the decedent at the time of death. Taxes imposed upon death may take one of two primary forms. An estate tax is levied on the transfer of property by the decedent. The federal estate tax is an example of this form because it is a tax on the right to transfer...
43 Creighton L. Rev. 747 (2009-2010)
Creighton University School of Law