- 40 -
against Eckell, Sparks failed. Any recovery by the administrators
pro tem. would devolve to the Glovers as the residuary
beneficiaries. All the claims raised in the suit were claims that
belonged to either decedent or the estate. The 60/40 division,
instead of reflecting the merits of the coplaintiffs’ respective
claims, was in essence a vehicle for reducing the gross estate by
channeling to the Glovers funds that would go to them anyway as
residuary beneficiaries. We hold, therefore, that the Glovers’
claim for 60 percent of the settlement proceeds is not deductible
as a claim against the estate or deductible as an administration
expense.
Issue 3. Whether Payments Made by Decedent’s Estate to Attorneys
Representing the Residuary Beneficiaries or To Be Paid to
Mr. Glover for His Efforts in Discovering the
Misappropriation of Decedent’s Assets by Ms. Hurley and
Mr. Ross Are Deductible as Administrative Expenses
Pursuant to Section 2053(a)(2) or as Claims Against the
Estate Pursuant to Section 2053(a)(3)
Decedent’s estate argues that the payments it made to the
Glovers’ attorneys and any payments it will make to Mr. Glover for
his efforts in discovering the misappropriation of decedent’s
assets by Ms. Hurley and Mr. Ross constitute administration
expenses within the meaning of section 2053(a)(2) and section
20.2053-3(c)(3), Estate Tax Regs.
For estate tax purposes, the value of the gross estate is
reduced by amounts incurred for “administration expenses” that are
allowable by the laws of the jurisdiction under which the estate is
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