Legal Analysis of Estate Taxability of Trust Property

The shareholders beneficial interest in trust property is strictly analogous to the shareholders beneficial interest in the property of a business corporation. In both cases the value of the shares of interest are estate taxable. The value of the Trust itself or of the Corporation is not.

In our case, it is possible that the Revenue Department will recognize the Trusts and the transfers of shares valued at the time they were transferred as legitimate, but it is also possible that the Courts will set aside the Trusts, for any reason, or for no reason whatsoever.  

My experience with the Superior Court, the Appeals Court, and the Supreme Judicial Court is that none of them consider themselves bound by law, by the clear meaning of language or by reason; and that the only certainty is that there is no certainty and that one can reliably trust neither prior decisions nor the clear meaning of the law.

Ones actions must therefore be guided by an assessment of risks, on the one hand that one will make a large payment which would not have been collected had it not been submitted voluntarily, on the other hand, that one will be forced to pay large penalties and be imprisoned for long periods of time, because one relied on the unambiguous meaning of the statute.

The decision will hinge: a) on the value of money and on the monetary value of ones liberty; b) on ones recklessness, audacity and/or courage in ones willingness to take risks. Objectively, the willingness to take risks is both the source of personal destruction and of personal financial and spiritual wealth. The reckless individual is not happy, but neither is the coward.

My conclusion is that risks should be taken intelligently, and in the instant situation, I recommend paying for the advice of a minimum of two estate tax lawyers, and quite possibly hiring the one who is most favorably disposed to prepare, co-sign, and file the return, if any. 

August 18, 2017