24 Nov IS JEFFREY EPSTEIN’S ESTATE HANGING BY A THREAD?
The impending release of the Epstein files, including his “Birthday Book” and the U.S. Senate Committee on Finance’s investigating the IRS failure to audit his tax planning on others, could have an impact on Jeffry Epstein’s estate.
When Jeffrey Epstein died in 2019, his estate was originally estimated at $600 million. However, after paying out more than $170 million to more than 200 victims of sex trafficking, $105 million in a settlement to the U.S. Virgin Islands for fraud (he set up many shell companies and charitable organization tied to sex trafficking in addition to forming a corporation to get $73 million in tax incentives), estate taxes, legal fees, etc., his estate was around $33-40 million until his estate received a $112 million tax refund from the IRS. Assets such as his Manhattan townhome (originally valued at $90 million, sold for $51 million) were overvalued. Since assets were sold at distressed value, this resulted in an overpayment of taxes. His estate was valued at around $145 million earlier this year after the refund.
Epstein signed a pour-over will and revocable living trust called the “1953 Trust” (often people don’t use their name as the title so it is more private) 2 days before he died in an attempt to shield his estate from his creditors and the victims of his sex trafficking abuse. Although you can do a will and a trust minutes before your death, if you know about creditors or threatened claims, you cannot create legal documents such as a trust to defraud creditors. Furthermore, there was a question if he was of sound mind at that time.
It is unlikely that Epstein was able to fully fund his trust prior to his death. Even if he did or to the extent that he did, it could be set aside as a fraudulent conveyance. If assets are passed by his will, the executors have a fiduciary duty to pay off debts of the estate prior to distributing assets not re-titled into the name of the trust.
Epstein declared the U.S. Virgin Isles as residence pursuant to its more favorable tax laws (i.e. avoid higher New York state taxes).
Although at the time of this article it is unknown what the Epstein files will further reveal and if there is additional liability owed by his estate or those who may have conspired with him, we do know that Senator Ron Wyden, the Senate Finance Committee ranking member, has demanded the IRS investigate why Epstein was paid hundreds of millions of dollars for tax and planning advice (particularly by Wall Street billionaire Leon Black who didn’t even have a contract for Epstein’s services) which were not audited. The payments to Epstein (including $100 million from Black) were in excess of what compensation would be reasonable for the tax services rendered – especially when Epstein’s suggestions had to be reviewed by attorneys and CPAs (who sometimes advised Epstein’s planning misrepresented tax laws). Did Black make the payments to Epstein for other reasons? Could the IRS further probe Epstein’s estate to determine whether the value of the services for Black and others match his reported compensation?
Although Epstein’s estate is still large, there could be additional claims that will lead to its reduction. Furthermore, additional investigation into payment for Epstein’s “services” could impact many wealthy individuals and co-conspirators. Does crime pay?
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