Comedian Joan Rivers reportedly left her only daughter $75 million “in cash” and her ornate, sprawling, $35 million New York City apartment, according to UsWeekly.
Typically, financial planners and estate lawyers would use trusts and other financial strategies to shield substantial assets from state and federal estate taxes.
But if Rivers actually kept her money in cash, then Uncle Sam and the State of New York will be the biggest beneficiaries.
Rivers was mistrustful of bankers and financial advisers and may well have kept her assets liquid.
She was one of the few celebrities who did not fall victim to Wall Street swindler Bernie Madoff, who preyed on wealthy Jewish celebrities.
It won’t be known what, if any, tax avoidance strategies Joan used until her estate is entered into probate.
So how big of a hit could Melissa be facing?
Melissa would only be eligible for an exemption from federal taxes on the first $5.34 million of her mother’s estate, according the Internal Revenue Service guidelines.
Anything over that ana Uncle Sam gets a 40 percent cut. In Melissa’s case, that could amount to roughly a $40 million tax bill.
But that’s not all.
New York State recently overhauled its estate tax. But the change’s won’t help Melissa much.
Under the new law, the first $2,062,500 of the estate would be exempt from the tax because Joan died in September. The exemption increases annually over the next three years until it tops out at just over $5 million.
New York State collects its tax on a sliding scale and estates over $10 million pay the top bracket, 16 percent to Albany.
That brings Melissa’s total potential tax bill to $56 million, or half of all Joan’s money.
Let’s hope Joan employed some tax strategies and the tabloids are wrong.
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