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Estate Tax on Gift Tax: The Liability Conundrum

4 Pages Posted: 8 Jun 2009 Last revised: 12 Jun 2009

Bridget J. Crawford

Pace University School of Law

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP

Date Written: June 8, 2009

Abstract

This article addresses the specific question of who -- as between the beneficiaries of the estate and the lifetime donees -- will bear responsibility for estate tax generated with respect to gift tax included in the decedent’s gross estate, absent a specific provision to the contrary. Although some case law suggests that the donee of the lifetime transfer should pay the taxes, this result is at odds with the Uniform Estate Tax Apportionment Act (UETAA). The UETAA’s approach to this issue is more administratively convenient and thus represents a more sensible approach. Because the UETAA has not been adopted widely, we offer a simple form of agreement that can be adapted for use by any donor who wishes to change the statutory default rules about the payment of additional estate tax liabilities.

Keywords: estate tax, gift tax, wills, tax apportionment, apportionment clause, Uniform Estate Tax Apportionment Act

JEL Classification: K34, K11, K34

Suggested Citation

Crawford, Bridget J. and Blattmachr, Jonathan G., Estate Tax on Gift Tax: The Liability Conundrum (June 8, 2009). Tax Notes, pp. 1264-1268, June 8, 2009. Available at SSRN: https://ssrn.com/abstract=1414520

Bridget J. Crawford (Contact Author)

Pace University School of Law ( email )

78 North Broadway
White Plains, NY 10603
United States

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP ( email )

1 Chase Manhattan Plaza
New York, NY 10005
United States
212-530-5066 (Phone)

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