Aggrieved New York taxpayers heading to the polls next week may have a bone to pick with Congress.
No, not the Congress of 2017, which passed a tax reform package last year reducing the amount of their property tax deduction in a state with notoriously high property taxes.
It is the Congress of 2001 that may draw voter ire for their passage of a 10-year tax cut package permitting wealthy New York estates to pay zero tax dollars in 2010.
The congressional action of two decades ago is coming back to haunt taxpayers in 2018.
Bad news for some New York taxpayers could be good news for others, thanks to a landmark court ruling handed down on October 9, 2018 by Manhattan Surrogate’s Court judge Rita M. Mella.
Mella ruled that a marital trust known as a QTIP (qualified terminable interest property) is not subject to federal or New York estate taxation if the surviving spouse is pre-deceased by a spouse who died in 2010.
The ruling could ultimately have wide-ranging implications for estates as large as that of the late George Steinbrenner, who owned the New York Yankees. Although the baseball mogul's estate was 95 percent leveraged to construct the team's new baseball stadium, it was valued at $1 billion in 2010, when Steinbrenner died.
The ruling has already had a profound impact on the beneficiaries of the less-well-known Seiden estate.
In 2014, New York state’s Department of Taxation and Finance made a determination of tax deficiency in the estate of Evelyn Seiden, the 89-year-old widow of Jules Seiden, who died in 2010 at age 94. Jules, a German immigrant formerly employed as an architect for a construction firm, left his wife a wealthy woman through the marital trust known as a QTIP.
A QTIP trust qualifies for the marital deduction in the estate of the first spouse to die.