Tax & AccountingAugust 12, 2021

Religious Divorce Was Valid; Estate Allowed Marital Deduction

By: CCH AnswerConnect Editorial

Religious Divorce Was Valid; Estate Allowed Marital Deduction

In S. Grossman Est., the U.S. Tax Court concluded that a religious divorce that was invalid under New York state law was valid in Israel where a decedent remarried. As result, the decedent’s third wife was recognized as his surviving spouse, and the marital deduction was allowed.

Decedent’s Marriages and Divorces

The decedent and his first wife (Wife 1), who were both Jewish, were married in New York in 1955, but they separated in 1965. In 1967, the decedent obtained a divorce in Mexico from Wife 1 although she did not participate in the divorce proceeding. That same year, the decedent married Wife 2, who was not Jewish, in a civil ceremony in New Jersey.

By 1974, the decedent’s relationship with Wife 2 had ended. That same year, Wife 1 sought a declaratory judgment that the Mexican divorce was null and void and that she was still the decedent’s lawful wife. The New York court agreed with Wife 1 that the first marriage had not legally ended, the marriage to Wife 2 was null and void, and the decedent and Wife 1 were still lawfully married. After the ruling, Wife 1 and the decedent never reconciled or lived together.

Years later, the decedent was engaged to Wife 3, who was a Jewish Israeli citizen. Prior to traveling to Israel to marry, the decedent asked Wife 1 to cooperate with him in the giving of a get, which is a religious divorce under rabbinical law. The Orthodox rabbinical court supervised the get, and the decedent received a letter confirming that he had obtained a Jewish divorce in a rabbi’s presence and was free to marry according to Jewish law.

After presenting evidence of the get to the authorities in Israel, the decedent and Wife 3 were married in a traditional Orthodox Jewish religious ceremony. They remained married until the decedent’s death in New York. Nearly 90% of the decedent’s $87 million estate was bequeathed to Wife 3, and the estate claimed a marital deduction for that amount. However, the IRS denied the deduction after determining that decedent’s religious divorce was not valid under New York law and, therefore, Wife 3 was not a surviving spouse.

Identifying the Surviving Spouse

Although the Tax Court concluded that the identity of the decedent’s surviving spouse would be determined by applying New York law, the court provided a summary of the rules on marriage and divorce of Jewish persons in Israel.

Israeli Rules on Marriage and Divorce of Jewish Persons

To be married under Jewish religious law, a person must be unmarried. A prior marriage can only be dissolved by the death of a spouse or a religious divorce. If the couple is eligible to marry under Jewish law, the couple is issued a ketubah (a marriage contract), which is signed before the wedding ceremony. After the wedding ceremony, Israel issues a marriage certificate that certifies that the couple is married under Israeli law.

New York Recognizes Place of Celebration

Instead of looking at whether the decedent’s religious divorce from Wife 1 was valid under New York law, the court examined whether the decedent’s marriage to Wife 3 was valid. New York recognizes a general rule that a marriage is valid if it is valid in the place of celebration with two narrow exceptions for incest or bigamy and prohibitions of positive law.

Because the marriage between the decedent and Wife 3 was valid in Israel, New York would respect the marriage unless one of the exceptions applied. The government argued that since New York courts do not recognize religious divorces, the decedent’s marriage to Wife 1 was never legally dissolved. Thus, his Israeli marriage to Wife 3 was bigamous.

However, in Israel, the decedent and Wife 1 were validly divorced, in the only manner recognized by Jewish law. The court concluded that, considering this, the New York Court of Appeals would accept Israel’s ruling that the decedent and Wife 1 were divorced, and the decedent was eligible to remarry.

In addition, decedent’s marriage to Wife 3 did not violate New York positive law that granted divorces only after due judicial proceedings. New York law could not be broken by actions, such as marriage, outside of New York. Second, recognition of a marriage outside of New York was not the same as granting a divorce.

The court noted that the ruling was narrowly focused on whether the New York Court of Appeals would recognize the Israeli marriage, which was not contested by Wife 1 and was left undisturbed by the lower courts.

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