Friday, January 11, 2019
On October 9, 2018, Manhattan Surrogate Court Judge Rita M. Mella ruled that a QTIP (qualified terminable interest property) marital trust does not fall under New York estate taxation if the surviving spouse was pre-deceased by a spouse who died in 2010. The New York State Department had 30 days after being served with the judgement and notice of settlement, and according to court records the Department decided not to appeal.
The ruling will have broad implications, especially for larger estates such as that of George Steinbrenner, long-time principal owner of the New York Yankees. His will set aside an undisclosed portion of his $1.1 billion fortune into a QTIP trust for his widow, Joan, who died in December of 2018. It was tasked to Steinbrenner's attorney, Robert Banker, to determine when the trust would pay the estate tax, or to wait until Joan's passing. Based on the court ruling, it looks like Joan Steinbrenner's estate won't pay a QTIP tax at all.
A big question is on what legal grounds the New York State Department of Taxation and Finance could appeal the decision, if it chose to do so. “They could appeal … on the ground that the surrogate did not apply the law correctly to the facts of this case, [but] the facts were undisputed,” the law firm that represented the estate that the opinion was in reference to.
See Joyce Blay, George Steinbrenner’s Estate Gets a Big Tax Break, Financial Advisor, December 26, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.