Regardless of whether you live in Lee County, or some other locality, those who are tasked with executing an estate have a number of responsibilities beyond just the distribution of assets to beneficiaries. When estate planning, people often overlook the tax responsibilities imposed by the Internal Revenue Service (IRS). Not adequately planning for and handling estate taxes can lead to legal issues down the road.
More than three years after his death, the estate of the late singer, Michael Jackson, is still unsettled. According to reports, the executors of Jackson's estate recently filed a petition to contest a notice of deficiency that was issued by the IRS in federal tax court. The dispute is resultant from significant discrepancies between the estate's worth as reported by the estate's administrators versus what the IRS believes is the actual value. The exact amount the IRS believes the estate to be worth was not reported, but it was reported that it could be in the ballpark of $1.25 billion, based on an estimate using the amount ordered by the notice. When the estate taxes were paid in 2009, the estate worth was reported at about $9 million.
The U.S. Tax Court will consider appraisals and other factors in order to determine whether or not Jackson’s estate will have to pay the $700 million the IRS demanded. In addition to owed taxes, that amount also includes penalties and interest for the deficient initial payment.
Estate complexities can create headaches for whomever you choose to administer your estate and prolong the process for your beneficiaries. An experienced attorney can assist you in creating a plan that accounts for all of the details and intricacies to ensure a smooth estate administration process so you can be at ease, knowing your affairs are in order.
Source: Forbes Magazine, “IRS To Michael Jackson’s Estate: Who’s Bad?”, Kelly Phillips Erb, August 26, 2013