Ag Law & Taxation Case Annotations

In re Estate of Schisler, No. M2008-02479-COA-R3-CV,  2009 Tenn. App. LEXIS 699 (Tenn. Ct. App. Oct. 19, 2009)(substantial and material evidence present to support trial court's determination that decedent's will invalid because two of decedent's children had confidential relationship with decedent and unduly influenced decedent to execute will).

Tremel, et al. v. Iowa Department of Revenue and Finance, No. 9-952/08-1718 (Iowa Ct. App. Oct. 7, 2009)(defendant cannot impose state estate tax on beneficiaries of life insurance proceeds that are not included in the decedent's probate estate; beneficiaries entitled to refund of tax, penalties and interest).

Estate of Murphy v. United States, No. 07-CV-1013, 2009 U.S. Dist. LEXIS 94923 (W.D. Ark. Oct. 2, 2009)(decedent's 95% limited partner interest in FLP discounted 32.5% for lack of marketability and 11.1% for minority interest; valuation discount allowed for various items of artwork; deduction allowed under I.R.C. Sec. 2053 for interest expense on two loans incurred during administration of estate; FLP created for legitimate business reasons and decedent received FLP interests proportionate to value of property contributed to FLP - bona fide sale exception applicable).

Langbehn, et al. v. The Public Health Trust of Miami-Dade County, No. 08-21813-CIV-JORDAN (S.D. Fla. Oct. 2, 2009)(plaintiff, same-sex partner of decedent who was named as agent under medical power of attorney for decedent, failed to state claim under Florida law for negligence, intentional infliction of emotional distress or breach of fiduciary relationship for alleged damages arising from hospital staff's failure to provide updates on decedent's medical situation; evidence showed that hospital staff consulted with plaintiff about critical emergency medical decisions for decedent and that further information or visitation within discretion of hospital staff).

United States v. Flowers, et al., No. 08-30964 (5th Cir. Oct. 1, 2009)(IRS challenge to disposition of estate that was put in trust to divert assets away from family member who was liable for unpaid taxes dismissed; IRS had no claim to assets that were not inherited; IRS did not raise state statute which allows for annulment of state court judgment).

In re Estate of Vaughan, No. E2008-02108-COA-R3-CV, 2009 Tenn. App. LEXIS 659 (Tenn. Ct. App. Sept. 30, 2009)(will construction case; will contained latent ambiguity and decedent intended to devise only 43-acre tract of farmland).

In re Estate of Feinberg, No. 106982 (Ill. Sup. Ct. Sept. 24, 2009)(decedent created a trust and "pour-over" will; trust divided into two trusts upon death for benefit of surviving spouse; upon death of surviving spouse remaining assets of trusts combined with 50% passing in trust to the then-living descendants of the decedent's two children; however any descendant who married outside of the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one-year of marriage would be deemed deceased as of the date of the marriage and such share would revert to such descendant's parent (child of the decedent); clause language upheld - decedent entitled to distribute his property as he deemed appropriate and favor grandchildren who made choices of which the decedent approved).

Estate of Malkin, et al. v. Comr., T.C. Memo. 2009-212 (decedent, long-time chairman and CEO of Delta & Pine Land Seed Co. retained possession and enjoyment of stock he transferred to two FLPs and did not transfer the stock in a bona fide sale for adequate and full consideration with the result that the value of the stock was included in the decedent's estate; decedent also made indirect gifts to his children of interests in various LLCs upon transfer to trusts of limited partnership interests in an FLP and transferred to the FLP interests in the LLCs; decedent also made various direct and indirect gifts to his children in the last three years of his life; various deductions for the estate disallowed pursuant to I.R.C. Sec. 2053(c)(2) and other deductions may not exceed the value of estate property subject to claims).

Estate of Charania, et al. v. Comr., 133 T.C. No. 7 (2009)(in case of first impression, court upheld deficiency determination against decedent's estate in finding that decedent and surviving spouse did not utilize Belgian community property regime after being exiled from Uganda; thus, entire amount of stock held only in his name is includable in his gross estate; decedent was UK citizen, but was born and lived in Uganda where he married and lived until exiled in 1972; the couple moved to Belgium, where they lived until the decedent's death in 2002; the couple did not change their marital property to a community property regime, thus 100% of decedent's stock was included in decedent's estate; Sec. 6651(a)(1) penalty applied for estate's failure to timely file return).

Keller, et al. v. United States, No. V-02-62, 2009 U.S. Dist. LEXIS 73789 (S.D. Tex. Aug. 20, 2009)(family limited partnership fully funded under state (Texas) law prior to decedent's death - immaterial that record title to property not transferred prior to death and decedent contractually obligated to fund general partner interest before death; decedent intended to transfer property to FLP at time she signed the FLP agreement; FLP formed for legitimate business reasons and transfer was for full and adequate consideration; estate entitled to refund of estate tax).

Pierre v. Comr., 133 T.C. No. 2 (2009)(even though single-member LLC is disregarded entity for federal tax purposes, individual not liable for gift tax on underlying assets contributed to LLC before contribution of LLC interests to trusts for individual's son and granddaughter; regulations do not support IRS position that LLC should be disregarded in determining tax on transfer of interests).

In re Estate of De Baca, No. 31,234, 2009 N.M. LEXIS 546 (N.M. Sup. Ct. Jul. 20, 2009)(child exerted undue influence on her mother by convincing the mother to leave the other eight siblings one dollar each under the terms of the mother's will while will left everything to the one child; child had confidential relationship with mother who relied on child for meals, housekeeping and transportation and child controlled mother's bank account and was agent under POA; at time of will execution, mother had suffered a stroke that affected her memory and thinking abilities; child kept dealings with mother secret from other siblings).

Wong v. Doar, No. 08-4992-cv, 2009 U.S. App. LEXIS 13311 (2d Cir. Jun. 22, 2009)(court upholds informal rule contained in Medicaid Manual Sec. 3259.7 issued by HHS Center for Medicare and Medicaid Services providing that income placed in a Special Needs Trust be considered in determining the extent of benefits to which a Medicaid-eligible person is entitled; rule does not conflict with 42 U.S.C. Sec. 1396(p)).

Romans v. Pearce, et al., No. F055910, 2009 Cal. App. Unpub. LEXIS 4614 (Cal. Ct. App. Jun. 11, 2009)(transfer of testamentary trust assets to LLC in order to facilitate trust's eventual termination and distribution of assets in form of equal ownership interests in LLC to 79 current remainder beneficiaries not inconsistent with trust terms; trustee would continue to manage LLC under trust's terms until termination; settlor's intent that 9,500 acres of farmland be preserved during children's lifetimes with land then distributed equally to grandchildren and great-grandchildren would be preserved by transfer of trust assets to LLC).

Estate of Miller v. Comr., T.C. Memo. 2009-119 (some assets transferred to FLP not included in transferors gross estate because transfer was bona fide sale for full and adequate consideration with a business purpose).

Troutman v. Troutman, et al., No. A08A2138, 2009 Ga. App. LEXIS 352 (Ga. Ct. App. Mar. 26, 2009)(trial court erred in denying motion for directed verdict; evidence did not support imposition of constructive trust on farmland).

Estate of Jorgensen v. Comr., T.C. Memo. 2009-66 (estate included assets transferred to family limited partnership; no bona fide sale and decedent retained control over assets; however, estate entitled to equitable recoupment for income taxes that children and grandchildren overpaid on sale of the assets).

Estate of Whittman v. Foiles, No. 08CA0720, 2009 Colo. App. LEXIS 389 (Colo. Ct. App. Mar. 19, 2009)(proceeds of sale of farm equipment were deceased husband's separate property and, therefore within exception to state law that creates a presumption that all tangible personal property in the joint possession or control of a decedent and spouse at time of death is owned in joint tenancy with right of survivorship; wife maintained off-farm employment and had no involvement in husband's farming operation).

Priv. Ltr. Rul. 200910002 (Sept. 30, 2008)(payment of premiums by trust settlors under split-dollar life unsurance arrangement is not a gift and insurance proceeds payable to trust not included in estate of either settlor).

In re Estate of Leavey, No. 100,283, 2009 Kan. App. LEXIS 109 (Kan. Ct. App. Mar. 6, 2009)(will scrivenor's initials located on lower corner of every page insufficient to satisfy statute of wills; question also existed concerning testator's capacity to execute will).

Brigham, et al. v. Brigham, et al., No. 3D07-2123, 2009 Fla. App. LEXIS 1501 (Fla. Ct. App. Feb. 25, 2009)(transfer by trustee of multi-million dollar tree farm to trust in which trustee named as sole beneficiary which was then subsequently sold violated fiduciary duties, required court approval and violated clear and unambiguous terms of trust; proceeds of sale ordered to be repaid with interest).

In re Estate of Hemlani, 2008 Guam 25 (Guam Sup. Ct. 2008)(probate court properly determined that decedent's will met statutory formalities for will execution; evidence present that will witnessed at decedent's request and in his presence, through decedent's attorney and witnesses signing of will occurred within sight of decedent).

Rawlings v. Rawlings, No. 20070797-CA, 2008 Utah App. LEXIS 474 (Utah Ct. App. Dec. 26, 2008)(trial court judgment imposing equitable constructive trust in favor of defendant reversed; ownership of family farm involved).

Williams v. Williams, No. A-07-1103, 2008 Neb. App. LEXIS 244 (Neb. Ct. App. Dec. 2, 2008)(case involves property division in divorce; corporate stock of ranching operation held not to be marital property, but debt associated with the farming operation was marital property).

Rassette v. Rassette, No. A-08-140, 2008 Neb. App. LEXIS 231 (Neb. Ct. App. Nov. 18, 2008)(proceeds from sale of house that wife brought into marriage included in marital estate because husband contributed significantly to improvement and operation of house along with the farming operation).

Karsenty, et al. v. Schoukroun, No. C-05-104607, 2008 Md. LEXIS 612 (Md. Ct. App. Nov. 12, 2008)(intervivos transfer to revocable trust for daughter is not a per se violation of the surviving spouse's statutory, elective right to a percentage of the deceased spouse's net estate under state law).

Aguilar v. Aguilar, No. G040230, 2008 Cal. App. LEXIS 1733 (Cal. Ct. App. Nov. 6, 2008)(spousal joint revocable trust containing community property of the spouses became irrevocable upon death of first spouse, and surviving spouse's withdrawal of her share of community property after death of first spouse improper without consent of remainder beneficiaries; defendant, a remainder beneficiary not precluded from making request for attorney fees on remand).

In re Estate of Johnson, No. 26312-6-111, 2008 Wash. App. LEXIS 2599 (Wash. Ct. App. Nov. 4, 2008)(case involves sale of farm held in trust for family members; trust language contained language permitting trustee to manage or sell the property in the trustee's discretion).

Calame, et al. v. Treece, et al., No. 07CA0073, 2008 Ohio App. LEXIS 4207 (Ohio Ct. App. Sept. 30, 2008)(case involves challenges to decedent's will, trust and a quit-claim deed).

Gross v. Comr., T.C. Memo. 2008-221 (no indirect gift of securities to children upon gift of FLP interests to which plaintiff had transferred securities eleven days earlier; 35 percent discount allowed to reflect minority interest and lack of marketability).

Pulley v. Short, et al., No. WD68257, 2008 Mo. App. LEXIS 1161 (Mo. Ct. App. Sept. 2, 2008)(decedent had been previously married and died with will executed during prior marriage which left property to spouse if spouse survived, then to children; decedent remarried and did not amend will to provide for current spouse (plaintiff); pre-marital agreement entered into specifying that plaintiff would receive none of decedent's assets held in revocable trust; plaintiff held to be pretermitted spouse entitled to intestate share of decedent's estate, but premarital agreement upheld).

Michelsen-Caldwell, et al. v. Croy, et al., No. WD-08-001, 2008 Ohio App. LEXIS 3597 (Ohio Ct. App. Aug. 22, 2005)(will construction case; decedent’s will caused question as to whether separate and distinct tracts were being devised or simply drew a dividing line).

In re Marriage of Webb, No. 48A02-0707-CV-568, 2008 Ind. App. LEXIS 1791 (Ind. Ct. App. Aug. 15, 2008)(trial court did not abuse its discretion in including planted, but not yet harvested, crops in marital pot and, when assigning value to crop, subtracting value of husband’s labor in planting, harvesting and caring for the crops; trial court did not err in including in marital pot USDA crop subsidy payments earned before and during period of parties’ separation, but paid during period of separation).

First Farmers Bank & Trust v. Whorley, No. 34A02-0802-CV-124, 2008 Ind. App. LEXIS 1677 (Ind. Ct. App. Aug. 5, 2008)(plaintiff appointed guardian over estate of elderly person who owned over $5,000,000 of farmland; at time of appointment, bulk of farmland operated under share crop arrangement with unrelated third party which owner and defendant (decedent’s daughter) understood qualified the estate for special use valuation; plaintiff converted lease to cash lease without considering impact on eligibility for special use valuation; owner died and estate’s special use valuation denied by IRS due to failure to meet qualified use test; defendant sued for breach of fiduciary duties as guardian; trial court granted partial summary judgment for defendant; on appeal, court held that defendant’s claim brought within applicable statute of limitations, and defendant had standing to sue; but, genuine issue of material fact remained as to whether existing leasing arrangement qualified the estate for special use valuation before being changed to crop lease; accordingly, and grant of partial summary judgment for defendant reversed).

In re Estate of Frank, No. 36206-6-II, 2008 Wash. App. LEXIS 1911 (Wash. Ct. App. Aug. 5, 2008)(ademption case involving bequest of land to family foundation).

Korenek v. Korenek, et al., No. 13-07-00111-CV, 2008 Tex. App. LEXIS 5652 (Tex. Ct. App. Jul. 29, 2008)(trial court’s declaratory judgment setting aside deed amounting to gift of farmland to two sons upheld; evidence sufficient that mother of unsound mind at time deed executed).

In re Estate of Wegelin, No. A-07-909, 2008 Neb. App. LEXIS 154 (Neb. Ct. App. Jul. 22, 2008)(dispute involving issues surrounding decedent’s estate, including challenge to lower court’s decision to allow personal representative to sell farmland in the estate).

In re Estate of Lane, No. 98,352, 2008 Kan. App. LEXIS 115 (Kan. Ct. App. Jul. 18, 2008)(case involves battle over assets to be included in decedent’s estate; heirs claim that additional assets should be included in estate and that surviving spouse should not have permitted surviving spouse to claim the homestead and spousal allowances due to lack of need; court ruled that surviving spouse co-owned contested farm equipment and cattle with decedent, had sole interest in leases as sole owner of farm property, and that surviving spouse was entitled to farmstead allowance and deserved spousal allowance under Kansas law).

Lasen v. Anderson, et al. , No. S-07-0138, 2008 Wyo. LEXIS 81 (Wyo. Sup. Ct. Jul. 14, 2008)(decedent’s daughter and her spouse exerted undue influence over decedent in “one of the clearest cases of undue influence we have seen”; 1995 deed to Wyoming farm upheld as valid as being delivered to and accepted by grantee, and fact that second deed written and executed by daughter and spouse (under power of attorney) in 1998 does not obviate 1995 deed).

Randall v. McGrath, No. 503707, 2008 N.Y. App. Div. LEXIS 5908 (N.Y. Sup. Ct. Jul. 3, 2008)(issues of fact remain concerning whether decedent intended to make gift of John Deere track loader to defendant and whether constructive delivery occurred).

Estate of Hindmon v. Jones, et al., No. E2007-00670-COA-R3-CV, 2008 Tenn. App. LEXIS 369 (Tenn. Ct. App. Jun. 27, 2008)(estate had right of indemnification from defendant for value of property owned by decedent that was foreclosed upon and sold, and the proceeds applied against a debt for which defendant was obligated).

Estate of Luedtke v. Stern, No. 2007AP1457, 2008 Wisc. App. LEXIS 482 (Wis. Ct. App. Jun. 19, 2008)(quitclaim deed of remainder interest in farm from mother to son with life estate reserved by mother; son predeceased mother and son’s interest in farm belonged to son’s estate (thereby subject to state intestacy statute) and did not revert to mother upon son’s death because deed did not contain clear and unambiguous language that remainder interest ended upon son’s death).

Charron v. Charron, 16 Neb. App. 724 (2008)(divorce case involving farm assets; trial court did not err in awarding 138 acres to ex-wife; acreage not an integral part of ex-husband’s farming and ranching operation; ex-wife not entitled to “Grace” award to even-out property division because substantial marital estate existed which was divided evenly).

Estate of Luedtke v. Stern, No. 2007AP1457, 2008 Wisc. App. LEXIS 482 (Wis. Ct. App. Jun. 19, 2008)(quitclaim deed of remainder interest in farm from mother to son with life estate reserved by mother; son predeceased mother and son’s interest in farm belonged to son’s estate (thereby subject to state intestacy statute) and did not revert to mother upon son’s death because deed did not contain clear and unambiguous language that remainder interest ended upon son’s death).

Sherman v. Sherman, 16 Neb. App. 766 (2008)(undivided one-half interest in 15,000-acre cattle ranch owned in trust, but trustees (children of decedent) ran ranch as though trust did not exist; trustees engaged in self-dealing by leasing trust ground to themselves and breached fiduciary duty by not leasing trust ground to surviving spouse (mother of the trustees) at higher rental rate; no contract existed between mother and son for mother to make a will leaving son her portion of ranch in return for his ranching services; son lacked standing to sue mother for quantum meruit compensation for working and managing ranch and for expenses incurred).

Murphy v. Middleton, No. 28635, 2008 Mo. App. LEXIS 798 (Miss. Ct. App. Jun. 10, 2008)(no constructive trust imposed against plaintiff's daughter over farm and farmhome; plaintiff deeded farm to daughter and claimed that she would be allowed to live on the farm "until her death"; evidence showed that deed of farm intended as gift to daughter; no mistaken belief present relating to effect of execution of warranty deed).

Estate of Hage v. United States, No. 91-1470L (Fed. Cl. Jun. 6, 2008)(defendant's impoundment of plaintiff's cattle and cancellation of federal grazing permit not a taking; but, plaintiff had vested right in surface waters flowing from federal land that could have been put to beneficial agricultural use if not for defendant's interference (construction of fences and disallowance of plaintiff to clear obstructions upstream in 1866 Act irrigation ditches); plaintiff entitled to $4,220,431.20 plus interest from date of taking (beginning in 1983) plus attorney's fees and costs).

Broad v. Randy Bauer Insurance Agency, Inc., 275 Neb. 788 (2008)(defendant insulated from liability for insured’s failure to read policies; but, question remained as to whether insured’s estate stated valid cause of action against defendant concerning whether defendant was a broker or an agent).

Cameron, et al. v. Bissette, et al., No. COA07-408, 2008 N.C. App. LEXIS 1017 (N.C. Ct. App. May 20, 2008)(decedent’s holographic will ruled void for vagueness; decedent left “this Land” to certain beneficiaries, but with no explanation of what “this Land” referred to).

Shoemaker, Exr., et al. v. Gindlesberger, et al., No. 2007-0013, 2008 Ohio LEXIS 1192 (Ohio Sup. Ct. May 7, 2008)(beneficiary of decedent’s will may not maintain negligence action against attorney for preparation of deed that results in increased tax liability to the estate; beneficiary lacked privity with attorney and no special circumstances present which would override privity requirement).

Westphal v. Meyer, No. A116959, 2008 Cal. App. LEXIS 678 (Cal. Ct. App. May 6, 2008)(distribution of ranch under decedent’s will not subject to no-contest clause under will; pertinent provision of will did not incorporate no-contest clause by reference).

Miller, et al. v. Preble County Commissioners, No. CA2007-04-008, 2008 Ohio App. LEXIS 1807 (Ohio Ct. App. May 5, 2008)(farm property bequeathed to plaintiff from parent’s trust zoned as an ag district, but was not suitable for farming or pasturing livestock; plaintiff’s application for zoning amendment to rezone property as a restricted rural residential district allowing a 41 single-home subdivision denied; plaintiff’s challenge to denial as unconstitutional taking failed because existing comprehensive land use plan designed to protect ag land not arbitrary or unreasonable and did not deny all economically viable uses of the land).

Johannes v. Idol, et al., No. 97,156 (Kan. Ct. App. Apr. 25, 2008)(deeds to property executed in 1967 that reserved a life estate, held to be valid even though deeds not recorded prior to death and subsequent will attempted to devise subject property to different person than grantees; will not offered for probate; deeds delivered to some of the grantees constituted constructive delivery to other; placement of deeds in safety deposit box to which grantor had no access showed grantor’s intent to divest self of title to property upon execution of deeds, thus transfers effective).

Griswatch v. Lipchik, No. 275188, 2008 Mich. App. LEXIS 831 (Mich. Ct. App. Apr. 24, 2008)(case involves title dispute to farm property; decedent died intestate in 1995 owning 120-acre farm, but had executed power of attorney in 1978 concerning the farm; decedent added agent (decedent’s caretaker) as joint-tenant owner of farm in 1992 and agent added spouse as joint-tenant to farm later in 1992; decedent’s heirs challenge to POA fails because agent had power to “manage” the property just as the principal would; but heirs’ breach of fiduciary duty and undue influence claims remanded because trial court improperly ruled such claims barred by 3-year statute of limitations; actions involve attempt to quiet title and 15-year statute of limitations applies).

Balanda v. Ohio Department of Job and Family Services, No. 89861, 2008 Ohio App. LEXIS 1666 (Ohio Ct. App. Apr. 24, 2008)(creation of irrevocable trust by community spouse and funding part of trust with institutionalized spouse’s funds did not cease to make trust assets countable resources for purposes of institutionalized spouse’s Medicaid eligibility; trustee had discretion to make distributions to institutionalized spouse).

Timm v. Montana Department of Public Health, No. DA 06-0507, 2008 Mont. LEXIS 185 (Mont. Sup. Ct. Apr. 21, 2008)(Medicaid case; state law disallowing otherwise available exclusions for assets from being deemed “available” assets for Medicaid eligibility purposes violates state Constitution’s equal protection clause; Medicaid applicant may use post-eligibility income to pay nursing home care expenses incurred before Medicaid eligibility achieved).

In re Stafford, No. 33242, 2008 Ida. LEXIS 54 (Idaho Sup. Ct. Mar. 28, 2008)(Medicaid eligibility case; married couple established revocable trust in 2003 and deeded marital home to trust; in 2004, wife entered nursing home and trust later deeded home back to wife in her individual capacity; weeks later, wife filed application for Medicaid benefits; couple claimed that state Medicaid agency failed to include value of home in initial resource assessment (so as to increase the husband’s spousal share of couple’s resources); claim fails – home not treated as an available resource).

First American Title Insurance Co. v. U.S., No. 05-35520, 2008 U.S. App. LEXIS 6295 (9th Cir. Mar. 27, 2008)(buyers of homes purchased from estate heirs liable for unpaid estate tax pursuant to IRS 10-year estate tax lien, and buyers could not challenge additional estate tax assessment because they were not the “taxpayer”; buyers’ liability covered by title insurance policies).

Estate of Claeyssens v. California, No. B197307, 2008 Cal. App. LEXIS 419 (Cal. Ct. App. Mar. 27, 2008)(state law allowing collection of filing fees and surcharges for estate claims held unconstitutional; “pick-up” tax amounted to an unconstitutional estate or inheritance tax masquerading as a graduated probate court user or filing fee; in CA, legislature, acting alone, cannot impose an inheritance or estate tax; in this case, calling a $74,762 filing fee a “court user fee” disingenuous).

In re Egbert R. Smith Trust, No. 133462, 2008 Mich. LEXIS 466 (Mich. Sup. Ct. Mar. 19, 2008)(lease agreement gave petitioners irrevocable option to buy leased property upon respondent presenting bona fide purchase offer from third party; respondent breached lease by failing to honor the option; because real estate is unique, and because petitioners timely exercised their option to purchase the property, specific performance is proper remedy).

Dyer, et al. v. State, et al., No. F052848, 2008 Cal. App. Unpub. LEXIS 1834 (Cal. Ct. App. Mar. 3, 2008)(state (California) estate tax may only be assessed in an amount equal to the maximum allowable amount of the credit for state death taxes permitted under the I.R.C., and if the tax does not result in a total state and federal death tax liability in excess of the liability owed to the U.S.).