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Some investments can lead to disputes after death, case shows

If you received good financial advice during your early years, then you were probably told to invest your money wisely so that it will pay off for you in the end. As many will tell you, there is always some risk when you invest your money, mostly because there is no way of telling when an investment will succeed or when it will fail.

But there are some investments, such as in fine art, that are considered less volatile than others. These are typically thought to be safer investments that have a better chance of paying off later on. But such investments need to be carefully accounted for in your estate plan. That's because, as you may already know, you may need to pay some estate taxes on them. If you do not account for them carefully, disputes may arise, which is something the case we are about to present will illustrate for our Florida readers.

The case is from Texas where a widow is fighting back against the IRS who charged her deceased husband's estate $40.6 million because the agency believed that several pieces of valuable artwork were part of his estate rather than in the possession of an investment company called the Perpetual Corporation. According to the widow's claim, at no point during her late husband's life or after were the paintings transferred to his or her possession. She is suing to have the $40.6 million she paid to be returned.

Even though this case is not being handled by our courts, it should highlight for our readers one issue large estates can face when a person dies. This issue is how the IRS assesses estate taxes. As this case shows, large estates can be slapped with hefty amounts. But if these taxes were improperly calculated due to a misunderstanding about the estate, an executor of an estate may need to obtain a lawyer and seek legal remedy to resolve the dispute at hand.

Source: Courthouse News Service, "Widow Fights $40 Million Taxes on Art," Cameron Langford, Feb. 3, 2015

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