Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, May 31, 2010

Estate Taxes Cause Fights Among Beneficiaries

Money and man As I previously blogged, fights over who must pay taxes on inheritances can cause feuds among beneficiaries. While most states’ default laws apportion taxes among all beneficiaries, a will can override these default laws.

A typical will contains a “Dad-buys-dinner” provision which instructs that all debts and taxes be paid by the estate. Jeffrey Pennell, a law professor, believes that more fights occur due to this “Dad-buys-dinner” provision than from any other. For example, Charles Kuralt left property in Montana to his longtime lover, spurring a court battle over whether Kuralt’s widow should have to pay the taxes on that gift.

The issue is growing more complex as people increasingly use non-probate assets to give away their estate. This leaves less money inside the estate to cover the taxes and increases the importance of the determination of who pays the taxes.

To prevent such fights, the testator needs to know the default rule of his state and then decide whether or not he wants his will to adopt it.

See Estate Tax Pitfalls Seen in Wisconsin Case, Financial Advisor, May 10, 2010


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