This from Samantha E. Weissbluth writing for Wealth Management:

Gay son must marry woman to get inheritance

In a recent New York case, a father, in his will, dictated that his gay son’s child get nothing unless his son married the child’s mother.  Manhattan resident Frank Mandelbaum founded the ID verification company, Inteli-Check, and passed away in 2007 at the age of 73.  His son, Robert, a Manhattan Criminal Court Judge, is now arguing in a court battle that his longtime partner, Jonathan, is the only “mother” their infant, Cooper, has ever known.  Robert and Jonathan married shortly after the baby’s birth via surrogate.  The child is entitled to a share in a $180,000 trust established for Frank’s three grandchildren. 

The Manhattan Surrogate’s Court is pondering whether to approve a settlement to ignore Frank’s requirement as contrary to New York law.  Robert claims that Frank’s restriction “imposes a general restraint on marriage by compelling Robert Mandelbaum to enter into a sham marriage.”  He alleges that this violates state law supporting marriage equality.  The guardian ad litem appointed for Cooper agrees and stated “Requiring a gay man to marry a woman…to ensure his child’s bequest is tantamount to expecting him either to live in celibacy or to engage in extramarital activity with another man, and is therefore contrary to public policy.”

Frank’s wife is contesting Robert’s allegations claiming that Frank’s will “specifically prohibited [Cooper] from becoming a beneficiary.    Robert counters that Frank knew Robert was gay and his partner was welcomed at family gatherings.

Given New York’s passage of the Marriage Equality Act, in July of 2011, I think the odds are in Robert’s favor, but stay tuned!

In May 2012, we wrote about the final settlement of Brooke Astor’s Estate.  Her son, Anthony Marshall,  was sentenced in December 2009 to one to three years in prison.  He was convicted of 13 felonies and one misdemeanor. 

Now – that would be December 2012 – 3 years after the sentencing, his lawyer is arguing he shouldn’t have to go to prison.

So after 3 years he’s still not in jail.  I guess there really are different laws for the rich.

Stephen Rex Brown writing for The Daily News:

"THE DISGRACED son of Brooke Astor pleaded for mercy in appeals court Thursday, arguing he didn’t deserve to die behind bars.

Anthony Marshall, who was convicted in 2009 of taking advantage of his mother’s dementia and plundering millions from her $200 million fortune, watched from a wheelchair as his lawyers argued prison amounted to a death sentence.

Lawyer John Cuti noted Marshall, 88, suffered a ministroke during his trial and had already paid back $12 million.

“You want to send this man to prison, after he’s already paid back the money, so he can die there?” Cuti asked.

Prosecutors countered Marshall should serve his sentence of one to three years as a sign the state will stick up for the mentally fragile.

“Society will understand (when) we defend our most vulnerable citizens,” prosecutor Gina Mignola said. “This was a very long and concerted effort to loot his mother’s estate.”

Astor, the grande dame of New York society, died in 2007 at 105.

A ruling is expected next year."



A couple of months ago we wrote about the IRS’ s ridiculous position on the estate tax value of this piece of art featuring an "illegal eagle."

The case has been setlled – finally.  A charitable contribution was made to the Museum of Modern Art where it joins others of its ilk.  It spent the last few decades on loan at the Metropllitan Museum of Art.

Eric Gibson writes fo the Wall Street Journal:

"On Wednesday last week, New York’s Museum of Modern Art unveiled its most recent gift, and one of the most significant in its history: Robert Rauschenberg’s "Canyon" (1959). Rauschenberg was among the leading American artists of the post-World War II era, and "Canyon" is a "combine," a kind of large-scale, three-dimensional collage that includes photographs, pieces of wood, a mirror, a pillow and a stuffed bald eagle.

The arrival of "Canyon" at MoMA is the culmination of a five-year absurdist farce—one tinged more by Kafka than Feydeau—that involved the IRS, the U.S. Fish and Wildlife Service and the heirs of art dealer Ileana Sonnabend. It might have been laughable, except that the stakes were so high. "

Read the rest of his article.

P.S.  For you arty types – check out this blogpost and compare "Canyon" to Rembrant’s "Rape of Ganymede."

Attorney Jospeh Caramadre and his associate Raymour Radhakrishnan were to be tried for a scheme of defaruding dying individuals and make more than $15 million.  On November 20, 2012 they admitted in the U.S. District Court in Rhode Island that they had committed wire fraud and conspiracy. The guilty pleas were entered as part of a packaged agreement.

In exchange for the pleas, the U.S. Attorney’s Office will recommend that the court give the two men prison terms of no longer than 10 years. Each faced a maximum sentence of 25 years in prison and $500,000 in fines.

As reported by Darla Mercado for InvestmentNews:

" From 1995 through 2010, Mr. Caramadre created a strategy for investors that involved using variable annuities and naming a terminally ill person as the annuitant. Once the annuitant died, the investor received the death benefits, as well as a guaranteed return of the principal and other enhancements.

“The insurance companies collectively lost millions of dollars from defendants’ submission of variable annuities utilizing terminally-ill annuitants,” authorities noted in a court document stating the facts of the case. Some 20 carriers were involved, including Metropolitan Life Insurance Co., Western Reserve Life Insurance Co. and Transamerica Life Insurance Co.

The lawyer also offered “death put bond” strategies. Those involved assigning a sick person as a co-owner on the bond, along with an investor, who then profited when the co-owner died.

Federal authorities said that from July 2007 to August 2010, Mr. Caramadre and Mr. Radhakrishnan conspired to commit mail, wire and identity fraud.

The pair “concealed from the terminally-ill individuals and their family members that their identities would be used on annuities and bonds that were purchased by Caramadre and others,” authorities said. "

Here is the FBI’s new release:  click here

The FBI says:  "According to court documents, Caramadre located terminally ill individuals in various ways, including by visiting AIDS patients at a House of Compassion in Cumberland, Rhode Island, by locating family members and associates who were terminally ill, and by soliciting individuals who were terminally ill to purchase small life insurance policies.

According to court documents, Caramadre placed an advertisement in a local Catholic newspaper that provided that there was a compassionate organization that would immediately give $2,000 in cash to terminally ill individuals. Dozens of terminally ill responded to the ad. Caramadre gave Raymour Radhakrishnan, who began working for Caramadre in July 2007, the job of meeting with the people who responded to the ad for the purpose of obtaining their identity information and using that information on annuities and brokerage accounts.

According to court documents, Caramadre and Radhakrishnan made misrepresentations to terminally ill and elderly patients and their family members in order to obtain their personal identity information. They used the information, including names, dates of birth, and Social Security numbers, to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase death-put bonds in the victims’ names without their knowledge and consent. Caramadre and Radhakrishnan either forged the signatures of terminally ill people on account documents or obtained the signatures by means of misrepresentations. When the terminally ill person died, Caramadre and others reaped substantial profits by exercising death benefits associated with the investments."

Let’s say you got a divorce. As part of the divorce agreement your ex agreed to leave half of his estate to your kids. He dies. He leaves a will that doesn’t comply with the agreement – leaving 90% of his estate to his second wife. What happens? Enforce the contract you say, the kids get half. That’s what you and I think the answer should be. Maybe you have a divorce settlement with a similar provision. Will it hold up? That is the issue that has been tying up the Oleg Cassini estate for years.

Oleg Cassini, the fashion designer who made first lady Jackie Kennedy’s style the "single biggest fashion influence in history" died in 2006. Jackie had chosen Oleg Cassini as her exclusive couturier and called him her "Secretary of Style."

Cassini married film star Gene Tierney in 1941. Tierney, a very successful actress, was nominated for an Academy Award for her performance in "Leave Her to Heaven." (The story is the basis for the plot in Agatha Christie’s murder mystery, Mirror Crack’d.) Tierney and Cassini had two daughters, Christina Belmont and Daria Cassini. When Tierney was in her first trimester of pregnancy carrying Daria, a fan with German measles broke her quarantine to shake hands with her favorite star, and Tierney unknowingly contracted the disease. Daria was born deaf, severely retarded and nearly blind.

When Cassini and Tierney divorced in 1952, the marriage termination agreement mandated that half of Mr. Cassini’s estate be split equally between the couple’s two daughters upon his death.

Continue Reading Is a Divorce Agreement That Promises an Inheritance to Kids Enforceable?


The executor of the estate of a Houston man who died in September 2010 filed a negligence and negligent misrepresentation suit against Baker Botts on Oct. 10, alleging the firm made an estate-planning error that will cost the estate more than $1 million.

Read more here.

The errror stems from failing to file a gift tax reutrn and paying gift tax.



Philadelphia coin dealer Israel Switt died in 1990. In 2003, 13 years after Switt died, his daughter and grandsons drilled open a safe deposit box in Switt’s name and found 10 rare gold coins.

The coins were 1933 Saint-Gaudens double eagle $20 gold coins and were valued at approximately $80 million. The coin is named after its designer, the sculptor Augustus Saint-Gaudens. The Philadelphia Mint struck 445,500 double eagles at the height of the Great Depression, but it pulled them back weeks later as President Franklin D. Roosevelt ordered U.S. banks to abandon the gold standard. Not only were no more gold coins to be issued for circulation, people had to turn in the ones they had.

It became illegal for private citizens to own gold coins unless they clearly had a collectible value. This law was enacted during desperate times to prevent the hoarding of gold currency. Since there would be no more gold currency issued in the U.S., the Mint melted down the 1933 run of Gold Double Eagles and converted them to gold bullion bars by 1937.

Numismatic historians speculate that Philadelphia Mint cashier George McCann somehow sold or gave the coins to local coin dealer Israel Switt, our decedent. We may never know for certain how these coins left the Mint, but there is a general consensus among scholars that George McCann exchanged about 20 of the 1933 Double Eagles headed for melt down and replaced them with earlier dated Double Eagles.

Apparently Switt had 19 of the coins at one time, and one of them found its way to the collection of King Farouk of Egypt. King Farouk had legally exported his coin before the theft was discovered, and the Secret Service was unable to recover his specimen through diplomatic channels.

After King Farouk was deposed in 1952, his 1933 Double Eagle briefly appeared on the market, but when it became clear that U.S. authorities still wanted to confiscate it, it vanished again! More than 40 years later, British coin dealer Stephen Fenton showed up with it in New York, and the Secret Service finally seized it during a sting operation during which they purportedly negotiated to purchase the coin. Fenton fought a long legal battle during which the coin was stored in the Treasury Vaults at the World Trade Center. Only 2 months before the terrorist attacks of September 11, 2001, the litigation was settled and the famous coin was moved to Fort Knox. Fenton and the U.S. Mint compromised: the coin would be sold at auction, the proceeds to be split 50/50 between the Fenton and the Mint.

When Israel Switt’s children drilled open the safe deposit box, they found the coins in a gray paper Wanamaker’s department store bag. Switt’s daughter, Joan Langbord, gave the coins to the Philadelphia Mint to be authenticated and identified. What happened? The government seized the coins with no compensation to the estate.

The government said it was government property stolen in the 1930s from the U.S. Mint; and, therefore, they had a right to take it.

According to Adam Klasfeld writing for Courthouse News Service, in July 2011, the Langbords tried to convince a federal jury that the coins could have escaped the Mint legitimately through a "window of opportunity" between March 15 and April 5, 1933. The government’s star expert, David Tripp, acknowledged gold coins could have left the Mint during that window, but he added that there were no records that 1933 Double Eagles did.

Last week, Judge Legrome Davis of the Eastern District Court of Pennsylvania, stated that, "the coins in question were not lawfully removed from the United States Mint." He wrote further in his decision: "The Mint meticulously tracked the ’33 Double Eagles, and the records show that no (legal) transaction occurred… What’s more, this absence of a paper trail speaks to criminal intent. If whoever took or exchanged the coins thought he was doing no wrong, we would expect to see some sort of documentation reflecting the transaction, especially considering how carefully and methodically the Mint accounted for the ’33 Double Eagles."

The Langbord family will be filing an appeal to address the issue in the 3rd Circuit.

The decedent’s estate held contraband coins valued at $80 million. They were seized by the government. Sound familiar? It recalls the Rauschenberg "combine" work, "Canyon" valued at $65 million by the IRS for estate tax purposes even though it is illegal to possess or sell it.

To be consistent, shouldn’t the IRS be claiming estate tax on Israel Switt’s coins? And if they don’t, why should the Rauschenberg estate have to pay tax on artwork that is illegal to own or sell?


What is the value of a piece of art that cannot be sold? In the case of "Canyon" by artist Robert Rauschenberg, the IRS claims it is worth $65 million. They also want to tax the heirs who now own the artwork over $29 million.  

Last week I had the privilege of appearing on Fox News to discuss the dilemma that taxpayers can face when estate planning basics are overlooked. Click on the image below to watch.

Patti Spencer on Fox News 

Patti Spencer on Fox News

Fair Market Value and Estate Planning

All personal and business assets are subject to an estate tax based on fair market value at the date of death. In this case, deceased art owner Ileana Sonnabend knew that the Canyon artwork she held could not be sold because it prominently features a bald eagle. She had acquired a special permit to continue owning the artwork, but failed to transfer it out of her estate through a charitable donation prior to her death.

Read the New York Times Coverage

Here is an excerpt from a New York Times article on the story.  

Because the work, a sculptural combine, includes a stuffed bald eagle, a bird under federal protection, the heirs would be committing a felony if they ever tried to sell it. So their appraisers have valued the work at zero.

But the Internal Revenue Service takes a different view. It has appraised "Canyon" at $65 million and is demanding that the owners pay $29.2 million in taxes.

"It’s hard for me to see how this could be valued this way because it’s illegal to sell it," said Patti S. Spencer, a lawyer who specializes in trusts and estates but has no role in the case.


The family is now challenging the judgment in tax court and its lawyers are negotiating with the I.R.S. in the hope of finding a resolution.

Read the full New York Times story:
Art’s Sale Value? Zero. The Tax Bill? $29 Million.