Gifts not valid under state law; estate tax is increased.Three years before his death, Merl MERL - Material Engineering Research Laboratory (UK) MERL - Merlin (bird species Falco columbarius) MERL - Microelectronics Research Laboratory (Rutgers University) MERL - Minimum Essential Requirements List MERL - Mitsubishi Electric Research Laboratory MERL - Municipal Environmental Research Laboratory Townsend executed a durable power of attorney, appointing his son George as attorney in fact. While the power of attorney Power of Attorney A legal document giving one person (called an "agent" or "attorney-in-fact") the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal's property and finance. The power of attorney is frequently used in the event of a principal's illness or disability, or when the principal can't be present to sign necessary legal documents for financial specifically authorized George to do various things, it did not specifically authorize making gifts on Merl's behalf. George made gifts of almost $500,000 of Merl's property during the three years before Merl's death. The transfers, made to George himself and to other family members, were an attempt to reduce the estate tax that would be imposed on Merl's estate after his death by taking advantage of the maximum $1 0, 000 yearly gift tax exclusion. When George filed an estate tax return after his father died, he did not include in the gross estate Gross Estate The total dollar value of all property and assets in which an individual had an interest at the time of his or her death.Notes: The gross estate figure is commonly produced for federal income tax purposes. It does not include any deductions for outstanding debts, taxes or liabilities it is the gross value of the deceased person's assets. See also: Asset, Estate, Estate Planning, Taxable Estate the gifts made during the three years under the power of attorney. The IRS audited the return and claimed these gifts were invalid. It included the gifts in the gross estate, thereby increasing the estate tax by about $175,000. Result: For the IRS. The gifts were not valid. Nebraska law requires that a power of attorney explicitly authorize making gifts. Therefore, the amounts are includable in the gross estate under IRC section 2038. * Townsend (DC Neb., 1995). Edited by Anne Wagenbrenner, JD, LLM LLM - Launch Loader Module LLM - Layered Lossy Medium LLM - Left Lane Must Turn Left LLM - Legum Magister LLM - Lin Lunin Maldacena (class of half supersymmetric solutions in string theory) LLM - Loader Launcher Module LLM - Local Level Model LLM - Logical Link Multiplexing LLM - Lower Landing Minimums LLM - Master of Laws, editor, AICPA client newsletters. |
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