www. NYLJ.com Trusts Estates Volume 258—NO. 49 Monday, September 11, 2017 Dead Hand Control and

By And Estate Tax Considerations Terence E. Christina Smolev Jonathan

By Christina Jonathan and Terence E. Smolev he will of Pulitzer and Tony Award winning author and Tplaywright Edward Albee was recently admitted to probate in the Suffolk County Surrogate’s Court. This will directed his execu- tors to destroy some of his works. Albee passed away on Sept. 1, 2016 without a spouse, children or close relatives. His executors are accountant Arnold Toren and designer William Katz. As of this date, it appears that no one with legal authority (if any) has con- tested his last will and testament, which has been sparking controver- © SHUTTERSTOCK sial debates regarding these final copies of same. Once a will is admit- decide whether or not to honor his wishes. ted to probate, the executors have last wishes. The specific directive appearing an obligation to comply with the During Albee’s life, he certainly in the will instructs his executors will’s instructions. The problem is possessed the right to destroy to destroy any incomplete manu- that courts generally do not exam- his property whenever he chose. scripts, in any medium (electron- ine a decedent’s will to see if each Albee had elected to further exer- ic, writing or other) as well as all provision has been fulfilled, absent cise dead hand control, thereby someone contesting same, or if controlling his property post Christina Jonathan is a partner at the firm Berk- an accounting is required. Thus, mortem. The law generally allows man, Henoch, Peterson, Peddy & Fenchel. Terence E. Smolev is of counsel to the firm. Albee’s executors can themselves certain control after death, Monday, September 11, 2017

limited by some policy reasons or public policy may limit the resident of the United States. This and violations of the rule against manner in which a testatrix may taxable estate includes all of the perpetuities. otherwise legally dispose of cer- taxpayer’s property at the time of There are only a handful of cases tain property. death, less any applicable deduc- that address issues where execu- Of course, there are cases taking tions. The executors may also elect tors had to destroy decedent’s different viewpoints from the Beck alternate valuation, which generally property. Other famous deceased Court. As to Albee, with no one hav- allows the value to be determined artists, such as German Novelist ing objected to the will’s validity or six months after decedent’s date Franz Kafka, had instructed that the instructions therein, it appears of death, as opposed to the actual all his works be destroyed by his that there is no roadblock to pro- value at the date of death, pursuant friend and literary agent. Luckily for hibit the executors from following to 26 U.S. Code §2032. the literary world, Kafka’s friend did Albee’s instructions. There are two issues that Albee’s not follow his wishes. In addition, In addition, there exists a strong executors have to consider here- the will of Beastie Boys founder possibility that Albee’s estate will in. First, what is the value of the Adam Yauch prohibited any of his face future litigation should one of manuscripts considering all of the music to be used for advertising his unpublished works debut after relevant facts? Second, how does purposes. his death. Whether the executors the destruction of the manuscripts There was at least one case can seek court intervention to affect the value of the gross estate from 1998 wherein a will contest prohibit this release to the public so as to be in compliance with arose to prevent an executor from applicable Internal Revenue Law, demolishing a decedent’s real Dead hand control generally al- Rules and Regulations? property pursuant to an article lows certain control of property Generally, fair market value is in her will. In Re Estate of Beck, 177 after death, limited by some defined as “the price at which the Misc.2d 203. In Beck, Erie County property would exchange hands policy reasons and violations of Surrogate ruled that he was not between a willing buyer and a the rule against perpetuities. going to substitute the interests willing seller, neither being under of a quasi-public agency for that raises issues of possession and any compulsion to buy or sell and of decedent in a valid will, and whether Albee’s will can bar a third both having reasonable knowledge specifically held: party from finishing and/or releas- of relevant facts.” 26 CFR 20.2031- The court’s responsibility in ing any of his unpublished works. 1. The simplest way to determine overseeing the administration The executors of the Albee estate the value of any property is obvi- of a decedent’s estate is rooted will also be subject to prepar- ously to obtain a certified appraisal in the principle of implement- ing and filing accurate estate tax report. There are actually several ing the decedent’s testamen- returns, with the task of determin- sophisticated appraisers who spe- tary plan as determined from ing how to report the value of par- cifically value certain manuscripts the words used within the four tially complete or fully complete and fine art-related documents. corners of the will. That intent, manuscripts. As a general rule, 26 Since Albee was a renowned where discernible, must be U.S. Code §2001 imposes a tax on playwright, the value of his man- given effect unless contrary to the transfer of the taxable estate of uscripts will possibly be worth law or public policy. Statutes every decedent who is a citizen or significantly more now that the Monday, September 11, 2017

artist has passed away. For exam- Albee’s will. But then again, what been claimed. So, ill-advisedly for ple, playwright Eugene O’Neill happens from a tax point of view Albee’s estate, this destruction of provided written instructions that if Albee’s works appear after his the manuscript may now cost his his play, “Long Day’s Journey Into death? estate additional taxes at no ben- Night,” not be made public until 25 Nevertheless, taxing authori- efit to the estate whatsoever. years after his death. His wife dis- ties may still consider the value Perhaps Albee knew that the val- regarded these instructions and of some of Albee’s manuscripts ue of his unfinished works would released it three years after his before they would be destroyed be considered by the Internal Rev- death. This was deemed to be his in an effort to increase the value enue Service as part of his gross finest work. Albee was best known of his taxable estate. The informa- estate, and therefore he strategi- for his work “Who’s Afraid of Vir- tion made public for at least one cally decided to destroy same. But ginia Woolf,” which was turned manuscript is that a play entitled more than likely, the artist simply into a drama starring Elizabeth “Laying an Egg” was scheduled wanted to retain dead hand control Taylor and Richard Burton. Albee twice in the Signature Theater. over his manuscripts, especially won the Pulitzer Prize three times, This Off-Broadway nonprofit the- given his reputation for discrimi- as well as two Tony Awards. Thus, ater had the play “withdrawn by nating against actors while casting like O’Neill, his unfinished works Albee, who said it wasn’t ready.” his plays. Moreover, he could have very well could contain his next Id. Surely, some value can be cal- easily left the manuscripts to his masterpiece. In addition, Eva E. culated for this one piece about a Foundation, qualifying as a charita- Subotnik, a St. John’s University middle-aged woman struggling to ble deduction if he was concerned School of Law professor, cor- become pregnant. Thus, it appears about the estate tax. rectly states that “there is some- that at least one of the unfinished Meanwhile, the unfinished works thing special about these kinds manuscript’s value may have to of a great writer may never see of assets—they’re not just like be reported on Albee’s estate the light of day. What a shame for a mansion or a fancy watch, but tax return, especially if there are the art-loving community and for they’re socially valuable, and that copies of this piece already historical, as well as theatrical, has to play into the calculus.” distributed. purposes. Unfortunately, Albee direct- Furthermore, the usual rule ed his executors to “treat the for taking a deductible loss on materials herein directed to be tax returns is that any damage, destroyed as strictly confidential destruction or loss of property and to ensure that such materi- resulting from an identifiable als are not copied, made available event that is sudden, unexpected for scholarly or critical review or or unusual, i.e., a casualty loss, can 100 Garden City Plaza, 3rd Floor made public in any way.” If his be claimed. It can be argued that Garden City, New York 11530 executors are carrying out his the destruction of the manuscripts Phone (516) 222-6200 Ext. 236 wishes to the fullest extent, then can be considered an “unusual it is worthless, since a willing buy- casualty loss.” However, a willful Reprinted with permission from the September 11, 2017 edition of the NEW YORK er will pay zero for property that act clearly disqualifies any deduc- LAW JOURNAL © 2017 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or will be “destroyed” pursuant to tions that could have otherwise [email protected]. # 070-09-17-18