When highly successful individuals pass away, their families can receive a second shock when the Internal Revenue Service demands an excessive amount of money in the estate tax return. This problem, as many wealthy families in Massachusetts and the rest of the country have found out, highlights the importance of effective estate planning.
But even with a solid estate plan in place, there can be disagreement over the value of assets. Take the recent example of real estate billionaire and Minnesota Twins owner Carl Pohlad. Poland’s family is currently involved in a standoff with the IRS over a tax bill of a multi-million dollar tax bill.
The IRS claims that the Pohlad family owes as much as $255.8 million in estate taxes while the family argues that the sum is much less because the IRS grossly overvalued Pohlad’s interest in the Twins when he died five years ago.
The Pohlad family maintains that Carl transferred the majority of his interest in the Twins to his sons in the years preceding his death and valued his remaining interest in the team at $24 million when he died. The IRS valued Pohlad’s interest in the Twins at $293 million upon death.
The Pohlad family received a notice of delinquent taxes from the IRS in March 2013 and challenged the notice a few months later. This week, a trial began in Texas on the matter, but a decision might not be made until a year from now, legal experts say.
Typically, these cases are able to be resolved through mediation, so because this case has gone to trial it suggests that the parties are far from reaching a settlement, legal experts explain.
During the trial, both sides will present witnesses and evidence supporting their claims. The judge could decide to side with one party or arrive at a figure somewhere in the middle.
For that reason, effective lawyering is extremely important in these cases. Undoubtedly, the IRS has a beehive of lawyers at its disposal, and it’s vital for families feuding with the IRS to be represented by knowledgeable and experienced counsel as well.
Source: The Star Tribune, “Pohlad estate-tax trial begins Monday in Houston,” David Phelps, Sept. 29, 2014