This Section and its working committees (Guardianship / Conservatorship Project and Elder Law) deal with all issues relating to estate planning and the probate of decedents' estates, the avoidance of probate, and the protection of incompetents and their assets through guardianships and conservatorships.

 

 


 

Beverly Hills Bar Association
Legislative Updates
California Court of Appeal
 

Legal Updates for December, 2005

Estate of Jackson

U.S. District Court held an estate was entitled to a contested charitable deduction despite the fact that technically, the provisions drafted did not constitute a qualifying interest under IRC '2055(e). The Court looked at the Adistinct goal of the statute@ and the fact that, at the end of the day, the charitable deduction corresponded to the amount received by the charity.


Sowder v. United States

U.S. District Court upheld an estate tax marital deduction where the testator, in a holographic Will, conditioned his wife's receipt of the outright residuary legacy on her surviving until distribution of the legacy.

Facts: Clause of holographic Will stated All the rest, residue and remainder of my estate, both real and personal, ov every nature and wherever situate, of which I may die seized or possessed, I give, devise and bequeath unto my wife, Marie L. Sowder, if she survives me, and if she does not survive me, or dies before my estate is distributed to her, to my issue me surviving, in equal shares per stirpes.@

The IRS disallowed the Marital Deduction because, it argued, the contingency violated the terminable interest rule of '2056(b), requiring no contingency possibility to defeat a surviving spouse's right to a legacy.

The Court found in favor of the Estate (by granting a motion for summary judgement) stating that under Washington state law, the term Amarital deduction gift@ means a gift intended to qualify for the marital deduction as indicated by a preponderance of the evidence (including extrinsic evidence).

The evidence the Court looked at included the following:
Mr. Sowder did not want to pay any more tax than necessary;
A U.S. News & World Report article which addressed a change to the marital deduction was found in Mr. Sowder's papers, and it was more than probable@ that Mr. Sowder read the article;
Last to die insurance was purchased on the Sowders lives;
Mrs. Sowder understood from her husband there would be no tax payable on the first death; and
Mr. Sowder was a tax-wise businessman and individual.


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