James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comKey Contacts
Back
The Madoff scandal is no longer the lead story on the evening news; however, the ripple effect of the scandal remains with us even today.
In Estate of Warshaw v. Director, the Superior Court of New Jersey Appellate Division (“Appellate Division”) reversed the decision of the Tax Court of New Jersey that granted the estate a tax refund. The descendent died in 2006 and his executors filed a New Jersey Estate Tax Return in July 2007 paying tax on the value of an IRA that was managed by Bernard L. Madoff Securities LLC. The value of the IRA was provided to the estate by the custodian, an entity controlled by Mr. Bernard Madoff. You may recall that Mr. Madoff was arrested in December 2008 and he pled guilty to various charges on March 12, 2009.
In January 2009, the estate filed a claim for refund of estate taxes because the IRA was always worthless, even before death. The Division of Taxation (the “Division”) denied the refund claim and the estate sued in Tax Court. The Tax Court decision ordered the Division to pay the refund. The Division appealed and won a reversal in the Appellate Division. The Appellate Division held that no one had knowledge of the Ponzi scheme at the date of death; therefore, the value of the IRA for New Jersey estate tax purposes was the overstated value reported by the custodian.
The Warshaw case is an example of when and to what extent post-death events are considered in valuing assets for estate tax purposes. This area is unsettled and taxpayers may not find consistency between state and federal decisions.
- Practices: Tax and Trusts & Estates, Estate & Trust Litigation, Real Property Tax Strategies, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Author: Graham Staton
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Author: Michael Mietlicki
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Author: Sean M. Pena
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Author: Donald M. Pepe
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
Author: Chris Seelinger
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
Author: Marc J. Comer
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.