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Friday, March 29, 2013

Ed Koch: 'How'm I doing?' Lousy as an Estate Planner

How'mNYC Legend, Ed Koch, Pays $3M Due to Estate Planning Blunder With No Irrevocable Trust:

The world lost Ed Koch on February 1st, 2013; however, Mr. Koch who left only a 2007 will* to direct the distribution of his estate ... has left much of his estate’s worth to the government in estate taxes and probate fees.

Mr. Koch desired in his will to bequeath his estimated estate of $10 to $11 million to his sister, Pat Thaler, her three sons whom he “adored,” his faithful serving secretary of almost 40 years, Mary Garrigan, and some to the LaGuardia and Wagner Educational Fund with the remainder to other family members.

Mr. Koch’s estate will have to pay a New York state tax of 16% on every dollar over $1 million and a 40% federal tax on every dollar over $5.25 million. If it is assumed that his estate is worth $10 million, this would equate to $1.44 million in NY state estate tax and $1.90 million in federal taxes....

“He was such an accomplished, well rounded bachelor and a man of great Jewish faith. But I find it so surprising, himself being an attorney, that Mr. Koch did not manage his estate plan with the same veracity. I believe he could have done a much better job of avoiding the massive amount of taxes his estate will eventually have to pay,” laments Rocco Beatrice, Managing Director of Estate Street Partners, LLC.

http://taxprof.typepad.com/taxprof_blog/2013/03/ed-koch.html

Celebrity Tax Lore, Tax | Permalink

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Comments

Are former public servants supposed to try to avoid taxes?

Posted by: Kipper | Mar 29, 2013 10:30:10 AM

Maybe in not minimizing taxes Mr. Koch was listening to a different drummer. There is precedent: "Oliver Wendell Holmes left the residue of his estate to the federal government." http://www.ssa.gov/history/hueychapt4.html. The word patriotic comes to mind.

Posted by: Pat Oglesby | Mar 29, 2013 10:45:59 AM

Lack of veracity or tenacity?

Posted by: anon. | Mar 29, 2013 10:50:58 AM

The information in the article is not correct. It's not favorable for the profession when people comment on celebrities' taxes like that in order to criticize/mock the person who passed away.

I understand the larger goal that talking about estate planning helps motivate readers to set up their own plans, but wild conjectures can look tacky, especially when there are plenty of other sources that reflect charitable giving done during life.

Posted by: Tax Reader | Apr 1, 2013 7:19:22 AM

I guess now tax attorneys are not only zealously advocating clients' most selfish interpretations of their tax planning goals, but also supplying them.

Posted by: Paloma | Apr 1, 2013 4:10:13 PM