According to court documents, based on the repeal of the federal estate tax for the year 2010, the estate of Jules Seiden was not required to file a federal estate tax return, and did not.

The estate's New York tax return designated the trust as a QTIP and took a marital deduction for the trust property. The state issued a closing letter in 2012, accepting the estate's tax return.

Surviving spouse Evelyn Seiden died two years later, in 2014. The Seidens' only child, married daughter Sara Jane Hogan, is the executrix of her late mother's estate.

In preparing the New York state tax return for Evelyn Seiden’s estate, former counsel Sabino Biondi, a partner with the Manhattan law firm Wilk Auslander LLP, said he excluded the value of the marital trust property based on New York law.

New York law defines gross estate by referencing the federal gross estate. Since the estate of Jules Seiden’s state tax return reported the QTIP trust in 2010, Biondi said he prepared the New York tax return for the estate of Evelyn Seiden in 2014 by reporting the trust, but excluding its value from the taxable gross estate. He told Financial Advisor that he anticipated the state would challenge the action, which it did.

New York state tax officials responded by issuing a determination of tax deficiency in the amount of $462,546.18 plus interest, totaling about $530,000, based solely on the value of the QTIP Biondi had excluded from the 2014 estate tax return. Biondi instructed Hogan to pay the tax bill, based on his legal opinion that the 2014 QTIP assessment could be challenged.

Wiggin and Dana LLP law firm partners Robert Benjamin and Helen Heintz, representing the estate of Evelyn Seiden in October 2018, filed an application to vacate the notice of tax deficiency. The attorneys argued that since the trust property was not subject to federal taxation in 2010, it should not be subject to state taxation upon the death of the surviving spouse in 2014.

Legal papers report that attorney John Miller, representing the New York State Department of Taxation and Finance, argued that any reference to the federal Internal Revenue Code should be the United States Internal Revenue Code of 1986, with all amendments enacted on or before July 22,1998.

Mella, the Surrogate’s Court judge, sided with Benjamin and Heintz, finding for the estate.

“The Tax Department analysis is incorrect,” the judge wrote in her ruling.