Sunday, March 23, 2008

Nebraska Supreme Court agrees that group of relatives who inherited estate property from an expiring QTIP needed to reimburse the estate for estate taxes even though the second decedent who passed on the QTIP property had purported to waive reimbursement in his will. In re Ervin W. Blauhorn Revocable Trust, S-06-531, 275 Neb. 256 Husband and wife who had no children of their own set up a Qualified Terminal Interest Property Trust (QTIP) which would take effect when the first spouse died. When the wife died the widower took over the QTIP property. When he died the beneficiaries of the deceased wife's QTIP objected to paying his estate taxes that became due from the QTIP property. The husband's will purported to waive reimbursement claims, but not specifically for QTIPs. The Hamilton County Court ordered the QTIP beneficiaries to reimburse the estate. Nebraska Supreme Court affirms and holds the waiver was not specific enough to waive the QTIP beneficiaries' reimbursement requirement. Also the Supreme Court agrees that the county court properly admitted the estate attorney's affidavit in which the attorney attested to the total estate tax return and a hypothetcial tax return that excluded the QTIP property. "The language of article X of E rvin’s trust agreement, which was signed after the effective date of the current version of 26 USC § 2207A, indicated that there was to be no right of reimbursement against recipients or beneficiaries. However, we conclude that such was insufficient to waive the trust’s right of reimbursement under that section. A s is detailed above, this is so because there was no reference to § 2207A, or even to the QTIP trust or property, in article X, and thus no language “specifically indicat[ing] an intent to waive any right of recovery under this subchapter” as required by § 2207A. T he county court did not err in ordering the S charvins to reimburse the trust for a portion of the federal estate tax paid by the estate, and the S charvins’ first assignment of error is without merit. Messner, as the attorney who actually completed the federal estate tax return for the estate, was competent to testify to the amount he calculated as being due on that return. In addition, Messner was competent to testify about the alternative calculation he performed wherein he omitted B onnie’s property from the estate.

1 comment:

Anonymous said...

This case failed to note that the requirement of specific reference to 2207A was eliminated in the 1997 Congressional amendment concerning 2207A (b). 2207A (a) never did have the requirement of specifically mentioning 2207A. Also, the court did not deal with the reference in the statute to "otherwise directed" , which may be taken to mean any disposition contrary to 2207A reimbursement, e.g., clear intention to prorate estate tax as mentioned in a revocable trust. The Eisenbach case decided in Washington State, September, 2007, held such an intention to prorate waived 2207A reimbursement.