Trust For Tom Clancy’s Children is Required to Pay Taxes On Estate
Fairfax, VA (Law Firm Newswire) October 12, 2015 – In a continuing feud over who is responsible for paying the taxes on Tom Clancy’s $86 million estate, the judge ruled that the famous author’s widow could avoid making such payments.
The majority of Clancy’s estate is from a 12 percent ownership stake in the Baltimore Orioles and consists of a unique World War II tank. When the tax bill was initially due, Alexandra Clancy filed a lawsuit alleging that Mr. Clancy changed his will just prior to his demise in order to make certain that her inheritance was within the marital deduction, and thus, not taxable. Mr. Clancy died in 2013.
A judge in Baltimore decided in August 2015 that the $11.8 million tax bill will not have to be paid by Alexandra Clancy’s two-thirds share of the estate. He ruled that the tax is the responsibility of the $28.5 million trust that Mr. Clancy bequeathed to his four adult children from his first marriage. The tax bill represents 41% of the value of the trust.
Prominent Virginia estate planning attorney Lisa McDevitt said, “This case calls attention to the ways in which an estate plan involving a blended family can go badly, and emphasizes the importance of careful and detail-oriented drafting of estate plans.”
Clancy’s four children wished the tax bill to be evenly divided between their trust and a family trust of which Ms. Clancy is the principal beneficiary. Had the children succeeded, the estate taxes would have amounted to $15.7 million, and evenly divided between both sides so that each would have paid $7.85 million.
In the event that the judge’s decision prevails over any possible appeal, Ms. Clancy will not have to pay the $7.85 million tax, and Mr. Clancy’s children will be required to pay almost $4 million more than they would have had to pay if they were successful in the lawsuit. Despite the fact that there is evidence to suggest that Mr. Clancy wished the family trust to assume some of the responsibility for the tax, in his decision, Probate Judge Lewyn Scott Garrett stated that there was substantial evidence in favor of Alexandra Clancy’s assertion that her inheritance should not be taxed.
Specifically, the judge referred to the wording of the will that was indicative of Mr. Clancy’s intent, which could only be accomplished if Ms. Clancy’s share of the estate was not subject to tax. Her portion of the estate includes the family trust and a tax-exempt marital trust, and is worth approximately $57.5 million.Learn more at http://www.mcdevittlaw.net