Category Archives: estate tax

Where’s My Money

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April 10, 2010.
“Hi, Marilyn”, Daniel said looking up from some financial reports. “You look angry is something wrong?” he asked. “You bet there’s something wrong. First I had to drag dad’s dead body all over the place and wear his clothes, and now you have me on some strict financial diet. I’m living like a nun. No vacations, no fun, nothing,” shouted Marilyn. “Now, Marilyn, we discussed this with dad last December, until his body is found, we can’t spend any money. Its not ours until he is officially dead, and the longer he sits out there, the harder it will be for them to prove his date of death. You’ve been doing a great job going out in the wrong direction every day looking for his body since the snow melted. Let’s keep this up for a few more months. If they haven’t found him by August, we’ll have to find him”, answered Daniel. “I don’t like it one bit”, Marilyn retorted. “Just keep in mind that if this works, you’ll have Two and a Half Billion dollars more, Marilyn”, Daniel responded. “Okay, said Marilyn, but times running”.

June 15, 2010

“Daniel, I’m getting tired of this. What is our deadline for finding dad” begged Marilyn. “Let’s say August 15, 2010. That will allow us a month to do the estate tax return on time”, replied Daniel. “Daniel doesn’t it bother you that Dad is out there, you know, the thought grosses me out”, Marilyn queried. “Yeah, when I think about it, it is, but what do you think happens after someone is buried?” replied Daniel. “I just want to get this over with, soon”, said Marilyn. “Trust me after this is over, you can have all the cabana boys you want”, Daniel smiled at her mischievously.

Where Oh Where did He go?

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“No”, Daniel responded , “and the doctor is afraid of him catching a secondary infection. Even we have to put on masks. I see there’s a card with it, do you mind if I give it to him and read him the card, Gladys?” “That=s fine, we just want him ‘to know we love him”, she answered and she turned and headed for her car on the circular driveway a bit upset that she couldn’t get more intel on Sidney’s condition, but happy to get the information she got. That would keep some of her clients chirping for days.

“Marilyn, I’m going to lock the gate to the road, I can’t take any more visitors”, Daniel shouted. “I don’t want you to have to deal with two bodies.”

December 31, 2010.

The phone rang at the Frome residence. “Hello this is Sidney Frome, please leave a message and we’ll get back to you as soon as possible”. The beeper sounded, “Hello Sid, pick up this is Fred, I wanted to see how you were doing”. Marilyn picked up the telephone. “Sid, daddy’s sleeping, but he seemed real perky today.”

January 1, 2010.

Before dawn that morning, Daniel and Marilyn took Sidney’s body and dropped it off in the woods outside of town, near the creek. They put some leaves around it, so that it would not be clearly visible. Daniel said to Marilyn, “you know this is how most horror movies start”. “Cut it out Dan” replied Marilyn, “this already gives me the creeps. I’ll probably need therapy for the rest of my life”.

Around noon, the phone rang and Marilyn answered. It was the lawyer. “I just wanted to call and wish Sid a happy New Year.” “Thanks” Marilyn said. “Daniel is giving him a shower right now. Dad feels real good today and is thinking about taking a walk later on before dark.” “Is that wise?” the lawyer asked, concern clearly evident in his voice. “You know Dad, he’s one stubborn old bird. We’ll try and stop him, but if he decides he wants to go, he’ll go.” Fred laughed, “Your father sometimes is just too much. Tell him Happy New Year and don’t be stupid”. As he hung up the phone, Fred looked outside. “Wow its starting to snow, that should keep the old buzzard inside”, he thought.. “Honey, do want me to put a fire in the fireplace for when the Mallons come over this afternoon?”

Just before dusk, Marilyn put on clothes identical to her father’s. She put a scarf over her face and wore no make up and put on glasses identical to her fathers and went on a walk toward town. As expected people shouted out to her and she kept her head down and kept walking. She walked into the woods where her father’s body was dumped, jumped up to a lower limb and climbed the tree like a teen and moved over to another tree where a change of clothes had been left for her. She changed clothes went back to the house. She waited an hour and went outside toward town, ringing doorbells and asking people if they had seen her father. She walked around yelling, “Dad, Dad”. Of course Sidney never responded.

The sheriff called for the blood hounds, but with the fresh snow, they lost the tracks very quickly and their handler was worried that they might get frost bitten. So, the search was called off.

January 2, 2010.

The Sheriff started a search party around town and around the farm, but to no avail. The Sheriff scratched his head. He couldn’t have gone too far, he thought to himself. He continued searching for three more days, but without any sign of the body, he figured, they’d have to wait until the snow melted.

Sid Turns up

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August 10, 2010

It was eight months before they found Sid Frome. “Sheriff, we found a body in the woods. I think it’s Sid. There’s the flannel cap, the black pants, what’s left of a ski vest. What a mess!” The Sheriff picked up the telephone and called the medical examiner’s office. “Hello, Mac, this is Sheriff Burnett of Fauquier County, better get Laura down here, we’ve got a hot one.” A few minutes later, the telephone rang at the Sheriff’s office, it was Laura, “I’m on the way, Sheriff.”

Several hours later, Laura looked at the skeleton in front of her. The stench was not too bad because there wasn’t much left. A few bits of tissue remained, but the animals, birds and bugs had done their work. No broken bones, no signs of foul play, The body looked like several that she had seen that had died of exposure. She took her camera, took pictures of the body, and took samples. The clothing was torn and spread all over the area, obviously by animals. She took pictures of the bits of clothing as well. “That poor man, he died out here, all alone. Why in the hell did his kids let him go out alone?”

August 15, 2010

Laura finished Sidney’s autopsy. She checked fluid levels, chemical levels, and looked for signs of foul play. There were slight evidences of frost bite in the tissues that remained, but then he supposedly died in a snowstorm.

She put her notes aside and rubbed her neck brushing back her red hair as she did so. She glanced at her watch. “Oh my gosh, I have a date in 45 minutes!!” She put the body back in the drawer, and her notes in the file, the file into the cabinet, and the headed to the parking lot. She jumped into her red sun-drenched convertible. “Gee, I haven’t been out all day”, she thought. She put the top down and pulled into the evening traffic.

Brian Peterson left the meeting room rolling his eyes. The Chief Counsel had briefed all of the estate and gift tax auditors on the 2010 changes in the law. In one month the first estate tax returns would come rolling in. The Service enacted a temporary procedure requiring that tax returns be filed for any estates exceeding One Million Dollars. It seemed like a useless exercise, but the Chief Counsel said there were two things that we should review. First, note which estates had the so-called Dynasty Trusts. These estates were exempt from estate and generation skipping taxes through the second generation. After that they would become taxable when the second generation died out. Thus, by documenting them for taxation down the road, they were protecting the treasury.

Second, confirm the date and cause of death. The Chief Counsel opined that suicide in 2010 by someone worth more than $1 Million could theoretically be viewed as tax evasion if the suicide was linked to a desire to evade taxes. Some people might also lie about the date of death, so the death certificates must be reviewed.

As he walked down the hall, Brian looked at his watch, “I’d better get going or Laura’s going to be mad as a wet hen, if I’m late”, he thought.

Laura and Brian went to a nice chain seafood restaurant in Reston, Virginia. After eating, they went out for a drink. “So Brian, tell me about your work”, said Laura. “I work at the Estate and Gift Tax Branch of the IRS. Its very hyper-technical and kind of boring work. Although we’re in a tax year where mischief could abound. For example, if a billionaire died in 2009, his family would owe hundreds of millions in estate taxes, but if he died in 2010, he’d owe zero estate taxes. The chief told us suicides might even be considered tax evasion. I guess we’ll be relying on you coroners this year a great deal.” Laura smiled. Then her face got serious. “You know I just had a case come across my desk this week that’s weird. A sick old man went for a walk on New Year’s day, got lost in the snow and died. His body was found this summer, badly decomposed and mostly eaten by vermin, scavengers and bugs.” “Sounds appetizing”, joked Brian. “The guy was a billionaire. I was going to put the date of death down as August 10, 2010, the legal date of death since that is when the body was found, it was likely January 1, 2010, since a witness supposedly saw him and his family called the sheriff to say he was missing on that day. But obviously, they would have a great incentive to lie about his going out, wouldn’t they? And I’ve been troubled by the fact that no one went out with that sick old man on a snowy day in January.” “Yeah, I suppose you’re right”, Brian said. “Do you have to put a date of death on the death certificate?”, he asked “Yes, our regulations require it, and the date we found the body is the legal date of death ” she replied. “And if you never found the body, what would the date of death be?” asked Brian. “Sounds like a stumper to me, but your determination would be binding I guess. What if for example he had been dead for a week or a day before New Year’s Day, how could you prove that he died before New Year’s Day, eight months later?” Laura smiled and said, “absent some really clear information to the contrary we can’t.”

A plan is hatched

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After Fred left, Sidney told the kids not to leave the room there was something he wanted to discuss.

That night, Sidney told Esmerelda Gomez that he wanted to thank her for her many years of service and that he was giving her and her family an all expense paid vacation to Orlando, Florida with full pay. She at first objected, saying “Who will take care of you, you are so sick, senor.” He said, that he wanted to spend his final days on this earth alone with his loving children. “Are you sure, senor, I get the feeling that they will not want to soil their hands caring for you?”, she asked. He said, “Don’t worry, they’ll have plenty of reasons to take care of me. In fact Billions of reasons to take care of me. I’ll see you after the New Year. Please be on time that day.”

As Esmerelda left the room she couldn’t understand why this sick man would send her away for the Holidays, but then she thought, the children will love all of the amusement parks. She opened the envelope and saw airline tickets, hotel reservations, amusement park tickets for her and her family and smiled. She couldn’t pass this up and who knows, when he dies, she’ll probably be fired and won’t have this opportunity for years to come. She smiled, “I’m goin to Disney World”.

Marilyn had spent a life trying to find the love that Sidney had deprived her. Her parents divorced when she was quite young. Her father was aloof and tried to compensate by giving her everything she asked for. As a result she spent years buying things, toying with men, and living a life that would make the debauched look tame. She was a slender and attractive dark haired beauty with brown eyes and long brown hair with streaks in it to give her that mildly slutty quality – except for the fact that she was filthy rich. She clearly lived the life. There was one time, she went to Las Vegas for a weekend. She met this talk fat guy named Donny. What followed could only be certified as bizarre. As they walked down the strip they ran into an Elvis impersonator who admired her “assets”. He invited them all up to his suite. When they got up to his room there were a couple of scantily clad women. The room had a humongous hot tub in it and “Elvis” suggested that they all get in it. They all got naked and jumped in the tub. Donny immediately put the moves on Marilyn. After some heavy breathing for awhile, she told him to give it to her hard and he obliged. A wild orgy ensued and by the end of the evening she had been serviced by both men and had some wild moments with some of the women as well. This was but one example of many in Marilyn’s life. Needless to say, Marilyn lived a very free and easy lifestyle. She appeared in the various tabloids weekly announcing who her latest boy toy was. She was a party girl’s party girl.

Daniel was more tame. He enjoyed the fine things in life, golf, tennis, private clubs, fine dinners, and of course willing women interested in being seen with a billionaire’s son. But he still worked in the Company business and put in 50 hours per week behind the desk trying to keep the business going as his dad wasted away. He was not unattractive, but did not have time or interest in working out at the gym every day and had a swarthy dough boy quality to him. He did not have the time to put into playing the field and hitting the party circuit. Marilyn seemed to have that market cornered, anyway. No need for him to be in the tabloids to. Just keep his nose to the grindstone and keep the family business solvent. He had learned from the master and slowly took over the reins of the business. That was the key, to keep the business in the family. It was worth everything to him.

Sidney learns about death taxes

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Yesterday, Laura Holden in August, 2010, Laura Holden began her autopsy of Sidney Frome.  Let’s meet Sidney

December 15, 2009.
Sidney Frome lived like many billionaires, in a federal style house in rural Virginia.   It had the usual long blue stone drive, with a circular asphalt driveway near the house.   Off to the side of the house was a garage housing several late model imported cars for himself and his children, not to mention the Duzenberg convertible that was his pride and joy.
Sidney Frome looked haggard.  The chemotherapy had not worked.   His billions could not stop the inevitable. His two children, Daniel and Marilyn entered the room along with his lawyer, Fred Smith. There were some tax issues that Fred wanted to discuss.  Marilyn wondered why she needed to sit in on such a boring topic as taxes. “Fred, what’s on your mind?”,  Sidney rasped.
“In 2001, a new Tax Act was passed.  It states that if you die in 2009, you can pass $3.5 Million to your heirs tax free.  What I am about to say may sound macabre, but if you die in the year 2010 your entire estate will pass to your children tax free. ”   Fred continued, “Man, there is no easy way to say this, but Sidney you really need to consider revoking your living will.”  A living will is a document where a person states their wishes that they do not wish to be kept alive artificially.  Sidney winced.  He could not imagine even one more day of pain, much less sixteen more days, a near eternity.   However, Fred had a point.   He had worked hard for his fortune.   Why should the government get it instead of his kids?  His children were the most important things in his life, now.   He regretted the things that he had done to sever his relationship with their mother.   He reflected on the long hours, the affairs and the lack of respect that he had shown her.   Now, she was happily married to some other man.   He thought about the day that each of his children were born.   He thought about the way he felt in the delivery room each time.   He remembered holding them in his arms after they were born, the nighttime feedings, the diapers, and the smell of baby powder.   He recalled their birthday parties, the baptisms, the prom nights, and all their many dates.  He remembered when Marilyn’s date came to pick her up,  she was wearing a resplendent pink dress,  and Sidney made sure he was out trimming the hedges with his massive garden shears, even though the gardeners had that chore covered.  He recalled playing catch in the backyard with Danny.   He recalled several visits to the principal’s office after Danny’s many fights in school.  Yes, he could try and hold on for sixteen days, and revoke the document.  “I guess its true that your life passes before your eyes in your final days”, he thought.
“I hope the old goat dies next year”, thought daughter Marilyn.   “It’s the least he can do. I’ll never forgive the bastard for what he did to mom. I hope the jerk suffers, too.  If anyone deserves to suffer, its him.  After all, he’s kept us on an allowance our whole lives, and now its ours.”  She thought of yachts, young men, trips to the Riviera, chauffeurs, and homes in all the trendy spots, Cannes, Martha’s Vineyard, Palm Springs, South Beach, Paris, and La Jolla. What a life. All that she said out loud, though, was, “Dad, it’s a lot of money!”
Daniel, too, had thoughts about his childhood. His thoughts were more balanced. Going to ballgames with his father, playing golf with his father and his business associates, spending time together at the office were some things that they did together and gave Daniel some fond memories to go with the less fond ones.  He would take over the family business which he had been running for the last few years.   He respected his dad and loved him.   He would miss the times they rode into the office together.   But he also knew reality.   He knew that if they had to pay 50% estate taxes, there would be no way to retain the business in the family.  Dad would not want it sold to strangers, or tied up in charitable trusts with a bunch of priests, university presidents, and lawyers making all the decisions.   His dad had resisted such overtures in the past.   He said, “Dad we could keep the business in the family, forever.”  “That’s right” Fred added,  “and with those dynasty trusts we created last year, your family could own the business for two generations without any death taxes.   But that’s only if you live past December 31.   You see back in 2001, President George W. Bush promised to repeal the Estate Tax.  Congress kept that pledge,  but because of the Budget Act passed by Congress in the 80’s,  the Senate cannot pass a tax bill which creates a budget deficit without sixty votes.  Since there were only 55 senators in favor of repeal,  they had to pass only a partial repeal.  Thus, the Estate tax is reduced to zero for one year, the year 2010.   The catch is that you have to actually die in 2010, not 2009 or 2011.  Thus, if the scion of a wealthy family dies in that one year, his estate avoids estate and generation skipping taxes.  Then the wars hit, the economy tanked, and suddenly the year 2009 is upon us with no change in the law.”  Sidney signed the document revoking his living will without reading it.  He thanked Fred for coming out this close to Christmas, and Fred left.