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because decedent possessed no interest in such a claim as of the
date of her death.
1. Fees of $247,500 Ordered by Court To Be Returned to
Estate
Respondent acknowledges that decedent’s gross estate should
not be increased by the return of the $247,500 of attorney’s fees
paid by the estate to Eckell, Sparks during the administration of
the estate, as ordered by the Orphans’ Court. Respondent contends,
however, that because the settlement agreement among the law firm,
the administrators pro tem., and the Glovers failed to allocate the
settlement among the estate’s cause of action for the return of the
fees, the Glovers’ claims, and decedent’s cause of action for
malpractice, there is no way of determining what part, if any, of
the $750,000 settlement represents repayment of the $247,500 in
attorney’s fees. We disagree.
When, as in this case, a settlement agreement does not
allocate the settlement among claims, the “intent of the payor” in
making the payment is an important factor in determining the
amounts properly allocable to the various claims. Knuckles v.
Commissioner, 349 F.2d 610, 613 (10th Cir. 1965), affg. T.C. Memo.
1964-33; Agar v. Commissioner, 290 F.2d 283, 284 (2d Cir. 1961),
affg. per curiam T.C. Memo. 1960-21; Metzger v. Commissioner, 88
T.C. 834, 847-848 (1987), affd. without published opinion 845 F.2d
1013 (3d Cir. 1988). If the payor’s intent cannot be clearly
discerned from the settlement agreement, the payor’s intent must be
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