Justia Trusts & Estates Opinion Summaries

Richard Spizzirri and his fourth wife, Holly Lueders, entered into a prenuptial agreement requiring Spizzirri’s estate to transfer $6 million to Lueders and $3 million to her children upon his death. After Spizzirri’s death, the estate paid the stepchildren and deducted the payments as “claims against the estate” for tax purposes. The Commissioner of Internal Revenue issued a notice of deficiency, denying these deductions, leading the estate to petition the tax court for review.The U.S. Tax Court ruled that the transfers to the stepchildren were not deductible as “claims against the estate” because they were neither “contracted bona fide” nor “for an adequate and full consideration in money or money’s worth.” The estate failed to shift the burden of proof to the Commissioner, as it did not provide credible evidence to support the deductions. The court found that the payments were essentially donative in character, as they were made to keep Lueders happy and maintain the marriage, rather than as part of an arm’s length transaction.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the tax court’s decision. The appellate court agreed that the payments to the stepchildren were not contracted bona fide, as they were related to Lueders’s expectation of inheritance and lacked the characteristics of a bona fide transaction. The court emphasized that the payments were made with donative intent and were not part of an ordinary business transaction. Therefore, the estate was not entitled to deduct the $3 million transfer to the stepchildren as “claims against the estate.” View "Estate of Spizzirri v. Commissioner of Internal Revenue" on Justia Law

The United States appeals the district court’s determination that commissions claimed by Defendant F. Gordon Spoor as personal representative of the Louise P. Gallagher Estate and as trustee of the Louise Paxton Gallagher Revocable Trust have priority over a special deferred estate tax lien on property designated by agreement under I.R.C. 6324A. The court agreed with the United States that special estate tax liens on property designated by section 6324A, unlike estate tax liens on the gross estate pursuant to section 6324, are not subject to an executor’s claims for administrative expenses. The court also held that Spoor’s administrative expenses do not take priority over income tax liens imposed pursuant to section 6321. Accordingly, the court reversed and remanded. View "United States v. Spoor" on Justia Law