In re Estate of Lofgreen

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www.nebraska.gov/apps-courts-epub/
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Nebraska Supreme Court Advance Sheets
312 Nebraska Reports
IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937In re Estate of Denzel R. Lofgreen, deceased.
Jon C. Lofgreen and Denzel H. Lofgreen,
Copersonal Representatives of the Estate of
Denzel R. Lofgreen, deceased, appellees,
v. Constance Lofgreen, appellant.
In re Estate of Ruth M. Lofgreen, deceased.
Jon C. Lofgreen and Denzel H. Lofgreen,
Copersonal Representatives of the Estate
of Ruth M. Lofgreen, deceased, appellees,
v. Constance Lofgreen, appellant.
___ N.W.2d ___
Filed November 18, 2022. Nos. S-21-1008, S-21-1009.
1. Decedents’ Estates: Appeal and Error. An appellate court reviews pro-
bate cases for error appearing on the record made in the county court.
2. Evidence: Stipulations: Appeal and Error. In a case in which the facts
are stipulated, an appellate court reviews the case as if trying it origi-
nally in order to determine whether the facts warranted the judgment.
3. Decedents’ Estates: Judgments: Appeal and Error. When reviewing
questions of law in a probate matter, an appellate court reaches a conclu-
sion independent of the determination reached by the court below.
4. Statutes. The meaning of a statute is a question of law.
5. Decedents’ Estates: Taxation. The broad language of Neb. Rev. Stat.
§ 77-2002(1) (Reissue 2018 & Cum. Supp. 2020) was designed to pre-
vent evasion of Nebraska inheritance or succession taxes.
6. Decedents’ Estates: Taxation: Intent. In determining whether to impose
inheritance tax under Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018 &
Cum. Supp. 2020) on a transferred interest in property, a court must con-
sider all the surrounding circumstances of the transfer rather than simply
the form of the transferring legal documents, in order to determine if a
decedent intended, as a matter of fact rather than a technical vesting of
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312 Nebraska Reports
IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937title or estates, to retain a substantial economic benefit or actual use of
the property until death.
7. ____: ____: ____. A decedent’s motives for failing to memorialize in
the transferring document such retained interest in possession or enjoy-
ment is relevant only inasmuch as it is probative of whether the dece-
dent intended to retain actual possession or enjoyment of the subject
property.
8. Decedents’ Estates: Taxation: Evidence. Whether a transfer is subject
to inheritance tax under Neb. Rev. Stat. §§ 77-2004 to 77-2006 (Reissue
2018) depends on extrinsic evidence and the surrounding circumstances
rather than the language of the conveying document.
9. ____: ____: ____. Taxability does not depend upon the form given the
transfer, but instead the law searches out the reality and is not halted or
controlled by the form.
10. ____: ____: ____. Whether transfers of property are subject to inherit­
ance tax because they were made in contemplation of death as described
by Neb. Rev. Stat. § 77-2002(1)(a) (Reissue 2018 & Cum. Supp. 2020)
is a question of fact determinable from the evidence and surrounding
circumstances, regardless of the language of the deeds.
11. Decedents’ Estates. In determining whether a transfer is one under
which the decedent retained at death the possession or enjoyment
of, or right to income from, the property as described by Neb. Rev.
Stat. § 30-2314(a)(1)(i) (Reissue 2016), the donor’s retained interest
in possession or enjoyment need not be reserved by the instrument
of transfer.
12. ____. The language of Neb. Rev. Stat. § 30-2314(a)(1)(i) (Reissue
2016) encompasses an interest retained pursuant to an understanding or
arrangement, which need not be express, but may be implied from all
the circumstances surrounding the transfer.
13. Decedents’ Estates: Words and Phrases. The terms “enjoy” and
“enjoyment” connote substantial present economic benefit rather than
technical vesting of title or estates.
14. ____: ____. The terms “possession” and “enjoyment” mean the actual
lifetime use of the property.
15. Decedents’ Estates. A transferor retains the enjoyment of property if, at
the time of the transfer, there is either an express or an implied agree-
ment that the transferor will retain the present economic benefits of
the property.
16. Decedents’ Estates: Taxation: Words and Phrases. “Possession or
enjoyment,” as used in Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018),
must be given its plain and ordinary meaning.
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Nebraska Supreme Court Advance Sheets
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 93717. Decedents’ Estates: Taxation: Intent. An appellate court cannot read
into Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018 & Cum. Supp. 2020)
a limitation that what was “intended” must be determined by the four
corners of any transferring document.
18. Decedents’ Estates: Taxation: Intent: Appeal and Error. An appellate
court cannot read out of Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018
& Cum. Supp. 2020) the term “and,” which connotes that the requi-
site intent exists independently from the legal form of the transferring
document.
19. Decedents’ Estates: Taxation: Intent. To be subject to inheritance
tax under the rates described in Neb. Rev. Stat. §§ 77-2004 to 77-2006
(Reissue 2018), all Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018 &
Cum. Supp. 2020) requires is that the decedent “intended” for the trans-
fer to actually take effect in possession or enjoyment after death.
20. Decedents’ Estates: Taxation: Deeds. If the form of the deed were con-
trolling, inheritance tax under Neb. Rev. Stat. § 77-2002(1)(b) (Reissue
2018 & Cum. Supp. 2020) could be evaded by transferring property by
a deed that on its face conveys the property without reservation of a
life estate, while retaining through an understanding or arrangement the
actual possession or enjoyment of the property.
21. Decedents’ Estates: Taxation: Legislature: Intent. The plain language
of Neb. Rev. Stat. § 77-2002(1)(b) (Reissue 2018 & Cum. Supp. 2020)
conveys the Legislature’s int ent to avoid evasion of Nebraska inher­
itance taxes by making taxability controlled by the reality of the dece-
dent’s intent to retain “possession” or “enjoyment” rather than by the
technical vesting of title or estates.
22. Decedents’ Estates: Taxation: Intent. The surrounding circumstances
relevant to determining whether the decedent intended for the transfer
to take effect in possession or enjoyment after death include, but are
not limited to, whether the grantor or grantee (1) received rent or other
income from the property, (2) paid taxes and expenses for the property,
(3) held themselves out as owners of the property, (4) lived on or had
exclusive possession of the property without paying rent, and (5) paid
for improvement on the property.
23. Decedents’ Estates: Taxation: Real Estate. One of the most valuable
incidents of income-producing real estate is the rent which it yields,
because he or she who receives the rent in fact enjoys the property.
24. Decedents’ Estates: Taxation: Deeds. Continued exclusive possession
by the donor and the withholding of possession from the donee are
highly significant factors in determining whether the decedent retained
possession or enjoyment despite the absolute language of a deed.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 93725. Stipulations: Trial: Attorneys at Law: Parties: Public Policy.
Stipulations voluntarily entered into between the parties to a cause or
their attorneys, for the government of their conduct and the control of
their rights during the trial or progress of the cause, will be respected
and enforced by the courts, where such stipulations are not contrary to
good morals or sound public policy.
Appeal from the County Court for Furnas County: Anne M.
Paine, Judge. Reversed and remanded with directions.
Susan J. Spahn, of Fitzgerald, Schorr, Barmettler & Brennan,
P.C., L.L.O., for appellant.
Jeffrey M. Cox, of Dier, Osborn & Cox, P.C., L.L.O., for
appellees.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Freudenberg, J.
INTRODUCTION
In two parallel probate cases, the county court denied a
petition to assess state inheritance tax under Neb. Rev. Stat.
§ 77-2002(1)(b) (Reissue 2018 & Cum. Supp. 2020) on real
property that Denzel R. Lofgreen and Ruth M. Lofgreen (dece-
dents) had deeded to their daughter decades earlier while
continuing to exercise control over, receive income from, and
pay taxes on the property up until their deaths. On appeal,
the daughter argues § 77-2002(1)(b), which states that “[a]ny
interest in property . . . shall be subject to tax . . . if it shall be
transferred by deed . . . and . . . intended to take effect in pos-
session or enjoyment, after his or her death,” applies whenever
a transfer is intended in fact to take effect in possession and
enjoyment after death, whether or not that intent is formalized
in the transfer documents. We agree and reverse the judgment
of the probate court.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937BACKGROUND
Jon C. Lofgreen and Denzel H. Lofgreen, corepresentatives
of decedents’ estates and decedents’ sons (collectively corep-
resentatives) filed inventories of Nebraska assets and a peti-
tion for determination of inheritance tax in two probate cases
before the county court. Decedents’ wills had been submitted
to probate in another state where decedents were domiciled at
their death. The inventory did not include Nebraska farmland
(hereinafter the property) decedents had conveyed to their
daughter, Constance Lofgreen, by a series of deeds from 1992
to 1995.
Constance objected to the petition for determination of
inheritance tax, because it failed to include the property as
subject to inheritance tax under § 77-2002. Constance’s objec-
tion filed with the court described that she had been “deeded” a
30-percent ownership interest in the subject property by each of
three separate deeds, after which she was deeded the remaining
10-percent ownership interest through a fourth deed. Constance
set forth in the objection that she did not know about the deeds
until several years later and that decedents’ intent when they
executed the deeds was for Constance not to have possession
of the property until after they were both deceased.
Stipulated Facts
The corepresentatives and Constance filed a joint motion
to submit the petition and objection to the court on stipulated
facts. At a hearing, the county court received the stipulated
facts into evidence. No other evidence was submitted.
The parties stipulated decedents “deeded” the property to
Constance by a series of deeds from 1992 to 1995. They did
not otherwise describe the verbiage of the deeds. They stipu-
lated that although Constance “owned” the property by 1995,
decedents “did not intend for Constance to have possession and
enjoyment of the [p]roperty until after their deaths.”
The parties further stipulated decedents continued to control
and farm the property, and receive income from the property,
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937until their deaths in 2019. In 2012, decedents leased the prop-
erty to their son Jon, who farmed the property for decedents
under a crop-share agreement whereby Jon received two-thirds
and decedents received one-third of the produce. Decedents
paid their one-third share of expenses for the property, reported
the property acres to the U.S. Department of Agriculture Farm
Service Agency, maintained and received proceeds from crop
insurance on the property, and reported farm income from the
property on their income taxes. Additionally, decedents paid
all real estate taxes for the property, although in some years,
Constance paid the taxes and decedents reimbursed her.
The parties stipulated Constance received no income from
the property and paid no expenses for the property (unless
later reimbursed by decedents) until after decedents’ deaths.
In 2020, after decedents’ deaths, Constance, for the first time,
entered into a farming agreement with Jon, purchased crop
insurance on the property, received a one-third share of the
property income, paid one-third of property expenses, and
assumed responsibility for taxes on the property.
Decision
The county court entered an order in both cases conclud-
ing the property should not be included in Denzel’s estate for
purposes of inheritance tax, because it was not, as described
by § 77-2002(1)(b), “transferred by deed, grant, sale, or gift
. . . and . . . intended to take effect in possession or enjoyment,
after his or her death.” Although the deeds were not entered
into evidence, the court refused to consider evidence outside of
the four corners of the deeds of an intent to retain possession or
enjoyment in fact. It reasoned that decedents did not expressly
retain a life estate in the deeds and that the written deeds were
dispositive of decedents’ intent.
While Constance had pointed out that the plain meaning of
§ 77-2002(1)(b) focuses on intent rather than the legal effect
of the deed, the court stated it could not “speculate on what
the arrangement was between Constance and [decedents].” The
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937court reiterated this reasoning in a subsequent order denying
Constance’s motion to alter or amend. The court stated dece-
dents’ likely intent in executing the deeds before their deaths
was to avoid federal estate tax by appearing to have given up
“all incidence of ownership,” and the court thought it “incon-
gruent to now assign an intent to [decedents] which differs
from [the deeds].”
Constance appealed in both cases. We consolidated the cases
on appeal.
ASSIGNMENTS OF ERROR
Constance assigns that the county court erred in finding (1)
that the property was not subject to Nebraska inheritance tax
on the grounds that Constance had received full and complete
ownership of such property, (2) that decedents did not intend
to retain lifetime possession and enjoyment of the real property
subsequent to deeding the property to Constance, and (3) that
decedents intended to give up all incidents of ownership when
they executed the deeds giving the property to Constance.
STANDARD OF REVIEW
[1] An appellate court reviews probate cases for error appear-
ing on the record made in the county court. 1
[2] In a case in which the facts are stipulated, an appellate
court reviews the case as if trying it originally in order to deter-
mine whether the facts warranted the judgment. 2
[3] When reviewing questions of law in a probate matter, an
appellate court reaches a conclusion independent of the deter-
mination reached by the court below. 3
[4] The meaning of a statute is a question of law. 4
1
In re Estate of Fries, 279 Neb. 887, 782 N.W.2d 596 (2010).
2
Hand Cut Steaks Acquisitions v. Lone Star Steakhouse, 298 Neb. 705, 905
N.W.2d 644 (2018).
3
In re Estate of Fries, supra note 1.
4
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Nebraska Supreme Court Advance Sheets
312 Nebraska Reports
IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937ANALYSIS
[5-7] We have said the broad language of § 77-2002(1) was
designed to prevent evasion of Nebraska inheritance or succes-
sion taxes. 5 Section 77-2002(1) provides, in relevant part:
Any interest in property . . . shall be subject to tax
. . . if it shall be transferred by deed, grant, sale, or
gift . . . and: (a) Made in contemplation of the death of
the grantor; (b) intended to take effect in possession or
enjoyment, after his or her death; (c) by reason of death,
any person shall become beneficially entitled in posses-
sion or expectation to any property or income thereof; or
(d) held as joint owners or joint tenants by the decedent
and any other person in their joint names . . . .
We hold that in determining whether to impose inheritance
tax under § 77-2002(1)(b) on a transferred interest in prop-
erty, a court must consider all the surrounding circumstances
of the transfer rather than simply the form of the transferring
legal documents, in order to determine if a decedent intended,
as a matter of fact rather than a technical vesting of title or
estates, to retain a substantial economic benefit or actual use
of the property until death. A decedent’s motives for failing to
memorialize in the transferring document such retained inter-
est is relevant only inasmuch as it is probative of whether the
decedent actually intended to retain possession or enjoyment
of the subject property.
[8-10] In our decisions discussing § 77-2002, we have held
that whether a transfer is subject to inheritance tax under Neb.
Rev. Stat. §§ 77-2004 to 77-2006 (Reissue 2018) depends on
extrinsic evidence and the surrounding circumstances rather
than the language of the conveying document. 6 We have rec-
ognized, “[T]axability does not depend upon . . . the form
5
In re Estate of Bronzynski, 116 Neb. 196, 216 N.W. 558 (1927) (discussing
similar language in Comp. Stat. § 6153 (1922)).
6
See, In re Estate of Wheeler, 119 Neb. 344, 228 N.W. 861 (1930); In re
Estate of Bronzynski, supra note 5.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937given the transfer.” 7 “The law searches out the reality, and is
not halted or controlled by the form.” 8 Thus, in In re Estate
of Bronzynski, we held whether transfers of property were
subject to inheritance tax because they were made in contem-
plation of death as described by § 77-2002(1)(a) was a ques-
tion “of fact determinable from the evidence and surrounding
circumstances,” 9 regardless of the language of the deeds.
[11,12] Under “possession or enjoyment” language similar
to § 77-2002(1)(b), we have likewise looked to reality over
the form of the transferring legal instrument when deter-
mining if the transferred property is part of a decedent’s
augmented estate for purposes of computing the decedent’s
spouse’s elective share. In In re Estate of Fries, 10 we held that
in determining whether the transfer was one “under which the
decedent retained at death the possession or enjoyment of, or
right to income from, the property,” as described by Neb. Rev.
Stat. § 30-2314(a)(1)(i) (Reissue 2016), the donor’s retained
interest in possession or enjoyment “‘need not be reserved
by the instrument of transfer.’” 11 Instead, the language of
the statute “encompasses an interest retained pursuant to an
understanding or arrangement, which need not be express,
but may be implied from all the circumstances surrounding
the transfer.” 12
[13-15] We explained it is well settled that the terms “enjoy”
and “enjoyment” connote “substantial present economic ben-
efit” rather than technical vesting of title or estates. 13 Likewise,
the terms “possession” and “enjoyment” mean the actual
7
In re Estate of Wheeler, supra note 6, 119 Neb. at 349, 228 N.W. at 863.
8
Id. at 349-50, 228 N.W. at 863.
9
In re Estate of Bronzynski, supra note 5, 116 Neb. at 199, 216 N.W. at 559.
10
In re Estate of Fries, supra note 1.
11
Id. at 894, 782 N.W.2d at 603.
12
Id. at 895, 782 N.W.2d at 603.
13
Id. at 894, 782 N.W.2d at 603.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937“‘lifetime use of the property.’” 14 Thus, under the plain lan-
guage of the statute, “a transferor retains the enjoyment of
property” if, at the time of the transfer, there is an agreement—
either express or implied from the circumstances, including the
actual lifetime use of the property—that “the transferor will
retain the present economic benefits of the property.” 15 This
was consistent with the statute’s purpose to prevent a decedent
from transmitting property outside of probate in form, while
retaining an interest in substance, as a means of defeating the
right of the surviving spouse to a share. 16
Accordingly, we held the lower court had erred by conclud-
ing as a matter of law that the subject properties should not be
included in the augmented estate when there was conflicting
evidence of whether the decedent had an informal arrangement
to retain possession or enjoyment of the property. 17 There was
evidence that, after the transfer, the decedent had continued to
use the properties for recreational purposes, held himself out
as owner of the properties, performed management functions
for the properties, paid taxes on the properties, and received
income from the properties. 18 On the other hand, there was
evidence the transferees had merely gifted the income from the
properties to the decedent. 19 While the decedent did not retain
in the deeds any legal interest in the subject properties, we
specifically rejected the transferees’ argument that a decedent
retains possession or enjoyment from property under the trans-
fer only if the legal instrument secures the decedent’s right to
possession, enjoyment, or income. 20
14
Id. at 895, 782 N.W.2d at 603 (citing United States v. Byrum, 408 U.S.
125, 92 S. Ct. 2382, 33 L. Ed. 2d 238 (1972)).
15
In re Estate of Fries, supra note 1, 279 Neb. at 895, 782 N.W.2d at 603.
16
See In re Estate of Fries, supra note 1.
17
Id.18
Id.19
Id.20
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937States with similar “possession or enjoyment” clauses in
their inheritance tax statutes have agreed with near “complete
unanimity” 21 that the question of intent is not confined to the
four corners of the deed. 22 In People v. Shutts, 23 for example,
the Illinois Supreme Court held that a transfer was subject to
inheritance tax, “even though the intention” to postpone pos-
session and enjoyment was “not evidenced in writing” and the
deed was “in form absolute.”
Federal courts agree, and they thus employ an objective
test that looks to the actual effect of the transfer as to “pos-
session or enjoyment,” rather than technical title, in determin-
ing a decedent’s gross estate for the purposes of calculating
a spouse’s elective share under 26 U.S.C. § 2036 (2018). 24
In Comm’r v. Estate of Church, 25 for instance, the U.S.
Supreme Court held that a transfer of property to a trust was
“intended to take effect in possession or enjoyment” at death,
despite the transferor retaining no power to alter, amend, or
revoke the transfer. The “possession or enjoyment” clause,
reasoned the Court, involves not “a mere technical question
of title,” but, rather, “what the transaction actually effected as
to title, possession and enjoyment.” 26 Thus, the retention of
income for life was sufficient to subject the transfer to estate
tax, because “‘the liability for taxation depend[s], not upon
the mere vesting in a technical sense of title to the gift, but
upon the actual possession or enjoyment thereof.’” 27
21
Comm’r v. Estate of Church, 335 U.S. 632, 638, 69 S. Ct. 322, 93 L. Ed.
288 (1949).
22
Annot., 49 A.L.R. 864 (1927), and Annot., 100 A.L.R. 1244 (1936)
(collecting cases).
23
People v. Shutts, 305 Ill. 539, 541, 137 N.E. 418, 419 (1922).
24
See, Comm’r v. Estate of Church, supra note 21; Guynn v. United States,
437 F.2d 1148 (4th Cir. 1971); McNichol’s Estate v. C.I.R., 265 F.2d 667(3d Cir. 1959).
25
Comm’r v. Estate of Church, supra note 21, 335 U.S. at 651.
26
Id., 335 U.S. at 637, 638.
27
Id., 335 U.S. at 638.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937[16-18] The use in § 77-2002(1)(b) of the phrase “possession
or enjoyment” must be given its plain and ordinary meaning. 28
As discussed, these words connote actual retained interests
rather than technical vesting of title. It is also notable in deter-
mining the meaning of § 77-2002(1)(b) that the Legislature
stated any interest in property shall be subject to tax if trans-
ferred by a deed “and” if it is intended to take effect in pos-
session or enjoyment after death. At the same time, subsection
(1)(b) does not mention any transferring document, such as a
deed; it only describes how the interest was “intended” to be
transferred. We cannot read into § 77-2002(1)(b) a limitation
that what was “intended” must be determined by the four cor-
ners of any transferring document. 29 Nor can we read out of
the statute 30 the term “and,” which connotes that the requisite
intent exists independently from the legal form of the transfer-
ring document.
[19-21] In sum, to be subject to inheritance tax under the
rates described in §§ 77-2004 to 77-2006, all § 77-2002(1)(b)
requires is that the decedent “intended” for the transfer to
actually take effect in possession or enjoyment after death.
Enjoyment and possession are concepts of use in fact; the
terms of the legal document effectuating the transfer are not
decisive. This reading is consistent with the purpose of the
statute. If the form of the deed were controlling, inheritance
tax could be evaded by transferring property by a deed that on
its face conveys the property without the reservation of a life
estate, while retaining through an informal understanding or
arrangement the actual possession or enjoyment of the prop-
erty. As illustrated by the Illinois Supreme Court, in holding
that indicia of possession or enjoyment control over the legal
28
See Pittman v. Western Engineering Co., 283 Neb. 913, 813 N.W.2d 487(2012).
29
See Robinson v. Houston, 298 Neb. 746, 905 N.W.2d 636 (2018).
30
See In re Adoption of Yasmin S., 308 Neb. 771, 956 N.W.2d 704 (2021).
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937form of the transferring document in determining whether a
transfer was “intended to take effect in possession or enjoy-
ment” after death: “If the failure to evidence such intention
in writing would defeat the inheritance tax, such tax could be
defeated in every case by the parent executing a deed to his
children” while “relying upon their parol promises” to let the
parent retain possession and enjoyment. 31 The plain language
of § 77-2002(1)(b) conveys the Legislature’s intent to avoid
such evasion of Nebraska inheritance taxes by making taxabil-
ity controlled by the reality of the decedent’s intent to retain
“possession” or “enjoyment” rather than by the technical vest-
ing of title or estates.
[22-24] The surrounding circumstances relevant to deter-
mining whether the decedent intended for the transfer to take
effect in possession or enjoyment after death include, but are
not limited to, whether the grantor or grantee (1) received
rent or other income from the property, 32 (2) paid taxes and
expenses for the property, 33 (3) held themselves out as own-
ers of the property, 34 (4) lived on or had exclusive posses-
sion of the property without paying rent, 35 and (5) paid for
improvement on the property. 36 It has been said that “one of
the most valuable incidents of income-producing real estate
is the rent which it yields,” because “[h]e who receives the
rent in fact enjoys the property.” 37 Also, “continued exclusive
31
The People v. Estate of Moir, 207 Ill. 180, 190-91, 69 N.E. 905, 908
(1904).
32
In re Estate of Fries, supra note 1. See, Comm’r v. Estate of Church, supra
note 21; McNichol’s Estate v. C.I.R., supra note 24; In re Walker’s Estate,
100 Utah 307, 114 P.2d 1030 (1941).
33
In re Estate of Fries, supra note 1.
34
Id.35
Guynn v. United States, supra note 24.
36
Id.
37
McNichol’s Estate v. C.I.R., supra note 24, 265 F.2d at 671.
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937possession by the donor” and the “withholding of possession
from the donee” are “highly significant factors” 38 in determin-
ing whether the decedent retained possession or enjoyment
despite the absolute language of a deed.
[25] Constance and the corepresentatives of the estate sub-
mitted on stipulated facts the question of whether the subject
property should be included in the inventory of property
subject to inheritance tax. Stipulations voluntarily entered
into between the parties to a cause or their attorneys, for the
government of their conduct and the control of their rights
during the trial or progress of the cause, will be respected
and enforced by the courts, where such stipulations are not
contrary to good morals or sound public policy. 39 The county
court accepted the parties’ stipulations of fact into evidence
and did not declare them contrary to sound morals or against
public policy. Therefore, the stipulated facts submitted by the
parties will govern this appeal. Generally, an appellate court
reviews probate cases for error appearing on the record made
in the county court, 40 but in a case in which the facts are
stipulated, an appellate court reviews the case as if trying it
originally in order to determine whether the facts warranted
the judgment. 41
The parties stipulated that after the transfer to Constance,
decedents continued to pay expenses and taxes on the prop-
erty, leased out the property to their son Jon, received income
which they reported, and maintained insurance on the property.
Conversely, the parties stipulated Constance shared none of
these attributes of ownership, except later paying expenses
and taxes that the parents reimbursed. These facts are enough
to conclusively show that despite the form given the deed, the
38
Guynn v. United States, supra note 24, 437 F.2d at 1150.
39
Moore v. Moore, 302 Neb. 588, 924 N.W.2d 314 (2019).
40
In re Estate of Fries, supra note 1.
41
Hand Cut Steaks Acquisitions v. Lone Star Steakhouse, supra note 2.
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Cite as 312 Neb. 937reality was decedents intended the conveyance to take effect in
possession or enjoyment at death.
Whether, as the probate court surmised, decedents intended
to evade federal estate taxes through formal deeds that failed
to reflect their actual intent is not a circumstance probative
of whether they intended for the transfers to, as a matter of
fact, take effect in possession or enjoyment after their deaths.
Indeed, such evidence of evasion, if it had been submitted,
supports, rather than negates, the conclusion that decedents’
intent was to retain actual possession and enjoyment until
their deaths. The purpose of § 77-2002 is to impose Nebraska
inheritance tax on transfers that in substance, rather than in
form, should be part of the probate estate. However, we do not
express any opinion on whether other state or federal tax con-
sequences will also apply to the property Constance received
from decedents.
CONCLUSION
Under § 77-2002(1), the intent for a transfer of property to
take effect in possession or enjoyment after the transferor’s
death is a matter of the reality of the interest retained and
does not need to be reflected on the face of the transferring
documents. The stipulated facts show decedents intended to
retain possession and enjoyment of the property until death.
The property is subject to Nebraska inheritance tax under
§ 77-2002(1)(b). We reverse, and remand with directions for
the court to include the property in the inventory subject to
inheritance tax.
Reversed and remanded with directions.
Cassel, J., concurring.
I unreservedly join the court’s opinion, but write separately
to assure an informed reader that this court is not blind to the
reality at work here.
Constance filed an objection to the proposed determination
of inheritance tax, despite that her objection would result in
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IN RE ESTATE OF LOFGREEN
Cite as 312 Neb. 937an increase to the amount she would owe. At oral argument,
counsel at least impliedly conceded that this effort was not a
demonstration of altruism or public spirit. As that discussion
made clear, this tactic was driven by the confluence of federal
tax law changes after the deeds were executed and recorded.
Two changes coincide. First, the unified credit against
federal estate and gift taxes has ensured that estates of this
size would now pass free of federal estate tax. Second, the
stepped-up basis for income tax purposes attributable to prop-
erty passing at death provides an enormous incentive to cap-
ture property back into a decedent’s estate—despite a deed
conveying property away.
I express no opinion on whether other state or federal tax
consequences will also apply to the property at issue here.
Our province here extends only to the question presented
regarding state inheritance tax. But we recognize the incen-
tives at work.