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already had control in an investment management account of most
of decedent's assets. In addition, the estate primarily
consisted of marketable securities that were converted almost
immediately into cash or cash equivalents.
Third, the fees requested by HBW were fixed and not
contingent on the results produced. Contingency fee arrangements
are rarely used, however, for services related to estate
administration. Moreover, given the size and liquidity of the
estate, the collectibility of HBW's fees was never an issue.
After a review of all the factors, we conclude that the
$368,100 in attorney's fees is reasonable under New York law.
Accordingly, we hold that the attorney's fees are allowable under
local law. We next determine whether the fees are allowable
under the regulations.
II. The Regulations
The regulations provide the following requirements for the
deduction of administration expenses:
The amounts deductible * * * are limited to such
expenses as are actually and necessarily incurred in
the administration of the decedent's estate * * *. The
expenses contemplated in the law are such only as
attend the settlement of an estate and the transfer of
the property of the estate to individual beneficiaries
* * *. Expenditures not essential to the proper
settlement of the estate, but incurred for the
individual benefit of the heirs, legatees, or devisees,
may not be taken as deductions. * * * [Sec. 20.2053-
3(a), Estate Tax Regs.]
"Expenses for selling property of the estate are deductible if
the sale is necessary to pay the decedent's debts, expenses of
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