Judge Orders Refund to Estate That Paid Tax Before Madoff Con Was Revealed

When New Jersey resident Theodore Warshaw died in 2006, his estate was valued at more than $1.8 million. Because in New Jersey any amounts in an estate above $675,000 are subject to estate tax, Mr. Warshaw’s executors paid $88,677 to the state. The bulk of Mr. Warshaw’s assets were held in an IRA, and when he died the IRA went to a trust to benefit his widow. The IRA assets were allegedly being invested in stocks, bonds and other financial instruments by Bernard L. Madoff Securities, LLC. Mr. Madoff’s company reported that at the time of Mr. Warshaw’s death the value of the IRA was more than $1.4 million. In December 2008, Mr. Madoff was arrested and it was revealed that Mr. Warshaw was among the victims of the largest Ponzi scheme in U.S. history. The money in Mr. Warshaw’s IRA was not being invested but instead had been used to pay other “investors.” The IRA’s value was not $1.4 million but $0. More in Elder Law Answers here.