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All About Domicile

This is complicated. Marilyn Monroe died in 1962 in California after she was fired from the film ‘Something’s Got To Give.” For then estate tax reasons, her executors claimed she was a NY resident. The rights to make money from her estate and likeness have been passed down to her estate heirs (and their heirs) over the past 50 years.

Several years ago, her estate sued a photographer for using her likeness for commercial purposes. A court ruled in favor of the photographer and said that there was no right to publicity at the time of her death. The State of California quickly passed a law authorizing a right of publicity and deeming it retroactive and transferable to heirs. The estate returned to court to have the previous verdict overturned. The court acknowledged the new law, but said that it was available only to residents of California. Because the estate had said that Ms. Monroe was a NY resident at the time of her death, the law did not benefit her estate.

In summary,the estate could not have it both ways – taxed as a NY estate, but utilize California laws for protection. Something had to give.

Illegal Eagles

Now for something complicated and fun (at least within the parameters of estate planning). An art collector died owning an art work which contained a stuffed eagle. The art was on display at the MoMA under an agreement after the federal wildlife service tried to confiscate it in the 80s.

Because the sale of dead eagles is prohibited by federal law, the estate appraisers valued the art at $0 because there is no market for it. The IRS said it was worth $15 million. When the estate rejected that valuation, the IRS played hardball and said it was worth $60 million and levied penalties for undervaluing it plus interest. The estate tax alone on this art would have been $27 million. The estate and IRS finally settled the matter when the estate donated the piece to MoMA and the IRS dropped the estate tax issue.

Couple of points:

1. The family had not benefited from this art for 20 years due to the previous agreement to keep it on display.

2. I do not agree with the assessment that art with no market is worth $15 million. Assets are worth what a willing buyer and willing seller agree upon. If there are no buyers, there is no value.

3. The collector’s estate had paid $470 million in estate taxes already and had sold $600 million of art to do so.

4. The author is wrong about the charitable deduction. The estate did receive a charitable deduction for the value of the art work which is why ultimately there was no tax on it.

5. Never pick up an eagle feather. It is illegal to do so and subject to a $25,000 fine. Unless you are a Native American or a member of the Screaming Eagle division of the US Army.

WVXU Broadcast

Forgive the self-promotion.  I will be on Chris Desimio’s “On the Money” program on WVXU tomorrow morning discussing changes to estate tax laws.  The segment will be here soon thereafter.

Thank you to Chris for having me on the show.  It is always fun.

 

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I am an attorney located in Cincinnati, Ohio who practices in the areas of estate planning, probate, asset protection, and small business advice. I make a difficult and bewildering process as simple as possible. Most importantly, I provide "more for less" for my clients.