Having signed his last will and testament two days before he committed suicide in a jail cell, Epstein created what may be a fortress around his estate, which will be problematic for the many women who have come forward to accuse him.
In most cases, when an estate is settled, debts and expenses are paid first, followed by charitable and spousal transfers, and then estate taxes are levied. However, in the case of Jeffrey Epstein, things are likely to become extremely tangled.
CNBC’s recent article, “Here’s why a bitter legal battle could be ahead for Jeffrey Epstein’s estate,” reports that a lengthy fight is coming as Jeffrey Epstein’s estate addressees the legal claims over the distribution of his assets. The 66-year-old was facing federal charges of sex trafficking of minors and sex trafficking conspiracy.
The time to do your will isn’t two days before you die.
Attorneys believe there will be a long legal fight, as alleged victims file claims against the money manager’s estate. The Epstein estate will be in the middle of lawsuits for a long time, until all of the plaintiffs are paid.
Let’s look at some the issues that heirs, plaintiffs and attorneys will face.
- Creditors get paid first. Epstein’s will tells his executor to pay from the estate several costs, including funeral and burial expenses, administration costs and “all of my debts duly proven and allowed against my estate.” The will then directs the executor to give all of his property after these payments and distributions to The 1953 Trust, which was also established on August 8. The trust distributions aren’t known, because the trust document wasn’t attached to the will.
This means creditors, including plaintiffs of the many lawsuits against Epstein who receive a judgment in their favor against the estate, will be paid before property passes through to the heirs.
- All trusts not equal. Trusts may provide creditor protection, but not all trusts offer the same level of protection. Irrevocable trusts can’t be changed by the grantor, once they’ve been established. When you transfer the assets to this trust, they’re out of your estate and you save on taxes at death. In addition, you’ve given up control of the asset—that’s why these trusts offer creditor protection. However, revocable trusts can be revised by the grantor during his or her life. Because the terms can change, the assets are still deemed to be owned by the grantor—making them subject to estate taxes and seizure from creditors.
You don’t save on estate taxes when you create a revocable trust, and Epstein’s trust is revocable. And although moving assets to an irrevocable trust may protect them from creditors, it won’t work if you’re facing legal claims.
- Where you live is key. Epstein was a resident of St. Thomas in the U.S. Virgin Islands, but his will mentions five properties, including a mansion in New York City. The other properties, all owned by corporations of which he owns shares, are in New Mexico, Florida, Paris and the Virgin Islands. New York is known to chase down well-to-do residents who claim to live in tax-free havens. They conduct non-residency audits and hit them with taxes. Big estates can mean a lot of revenue for New York.
New York State is not likely to let this big estate pass without grabbing its fair share of income and estate taxes. People may own as many homes as they like, but the state’s auditors will want to know where they keep their cherished belongings, where they vote and what state issues their driver’s license. It’s more than spending 183 days in a different state, as far as New York State is concerned.
Reference: CNBC (August 24, 2019) “Here’s why a bitter legal battle could be ahead for Jeffrey Epstein’s estate”
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