DocketNumber: Docket No. 6848-65
Citation Numbers: 49 T.C. 684, 1968 U.S. Tax Ct. LEXIS 156
Judges: Irwin
Filed Date: 3/27/1968
Status: Precedential
Modified Date: 10/19/2024
1968 U.S. Tax Ct. LEXIS 156">*156
49 T.C. 684">*684 The Commissioner determined a deficiency of $ 641.38 in the estate tax liability of the petitioner, Estate of Anna Lewis.
The sole issue for decision is whether the claim of decedent's husband against decedent's estate, which claim was allowed by a Michigan Probate Court, can be deducted from the gross estate under FINDINGS OF FACT Some of the facts have been stipulated. The stipulation of facts and the exhibits attached thereto are incorporated herein by reference. The petitioner is the Estate of Anna Lewis. The estate tax return 1968 U.S. Tax Ct. LEXIS 156">*158 involved in the deficiency determined by the Commissioner was filed on September 13, 1962, with the district director of internal revenue at Detroit, Mich. Albert and Anna Lewis (hereinafter sometimes referred to as Albert and Anna) were married in 1931. Two children were born to this marriage -- Norman and Marilyn. Throughout their married life Albert worked and had income. Anna was not employed. In the late 1940's Albert and Anna opened several joint bank savings accounts with funds furnished entirely by Albert. Their purpose was to facilitate the handling of Albert's estate in the event that he should predecease Anna. Anna kept possession of the passbooks, and Albert never examined them. The banks did not render statements. On December 1, 1954, and December 7, 1954, Anna, without the knowledge of Albert, withdrew $ 5,541.25 and $ 10,781.11, respectively, from two of the joint accounts. She deposited this money in new accounts which she opened in her name alone. 1968 U.S. Tax Ct. LEXIS 156">*159 49 T.C. 684">*685 In the latter part of 1957, during a family argument, Anna informed Albert of her actions regarding the bank accounts. This was the first time he discovered her withdrawals. Albert consulted B. Morris Pelavin (hereinafter sometimes referred to as Pelavin), an attorney and family friend of 25 years, about available recourse in securing the return of the money. Pelavin advised Albert that he was entitled to the money but that it would be necessary for him to commence a domestic relations action in the nature of divorce or separate maintenance in order to recover it. Because of the children, the fact that he did not want the community to become aware of his domestic troubles and his belief that Anna would not dissipate the money, Albert did not desire to undertake a domestic relations action at that time. Anna died testate on June 28, 1961, a resident of Genesee County, Mich. The same B. Morris Pelavin whom Albert consulted earlier was appointed administrator with will annexed on September 5, 1961, by the Probate Court for the County of Genesee. Anna's will, after providing for the payment of all just debts, provided that the residue of her estate should go to the two 1968 U.S. Tax Ct. LEXIS 156">*160 children -- Norman and Marilyn. At that time both were adults. The will expressly gave nothing to Albert. Albert subsequently filed a claim in the Probate Court alleging that decedent was indebted to him in the amount of $ 57,785.97, which represented the above-described withdrawals from the joint bank accounts and deposits by Anna. This amount included the amounts herein disputed. Pelavin conferred with Albert and his children -- Norman and Marilyn -- about the claim. As a result, on September 15, 1961, Albert and the children executed a written agreement which had been drafted by Pelavin. The agreement contained recitations of several premises ("whereas" clauses) on which the agreement purportedly was based, the relevant substance of which was as follows: The joint bank accounts resulted from Albert's earnings; the accounts should have remained in the names of Albert and Anna jointly; and the claim that Albert filed against the estate was just and should be allowed. The agreement concluded with Norman's and Marilyn's express consent to such allowance. On November 22, 1961, an informal hearing on Albert's claim was held in the Probate Court. The hearing lasted about 10 to 1968 U.S. Tax Ct. LEXIS 156">*161 15 minutes. Pelavin appeared as administrator of Anna's estate and informed the Probate Court of his 1957 conference with Albert and the advice rendered him which was mentioned earlier. He also related that he had conferred recently with Norman and Marilyn, that he believed the money belonged to Albert, and that he believed the claim should be allowed. Pelavin made available the original bank records of the joint accounts to the Probate Court. He further told the court that Albert 49 T.C. 684">*686 had been gainfully employed throughout his married life while Anna had not been so employed. At this hearing Albert answered questions regarding his children. He was not asked any questions regarding the bank accounts, and, consequently, gave no testimony about them. Only Albert and Pelavin were present at the hearing. Norman and Marilyn were neither present nor represented. The probate judge signed an order, prepared by the attorneys for the administrator, directing that Albert's claim as set forth in the agreement of September 15, 1961, between Albert and the two children be paid within 6 months from the date of the order. The order was filed in Probate Court on November 22, 1961, the1968 U.S. Tax Ct. LEXIS 156">*162 day of the hearing. The estate tax return for the decedent, Anna Lewis, listed Albert's claim as a debt of the decedent. In his notice of deficiency, the Commissioner determined that the decedent's withdrawals did not create a legally enforceable obligation against her, and that, consequently, Albert's claim against her estate was not deductible under OPINION The only issue presented is whether Albert's claim against the estate of his deceased wife, Anna, was allowable as a deduction from her gross estate by virtue of 49 T.C. 684">*687 Assuming Our research discloses no other applicable statutes of limitations. Petitioner does not contend that Anna fraudulently concealed from Albert the transfer of the joint accounts to other accounts in her name. To do so would be fruitless. Albert discovered these accounts in 1957, and did not bring an action within 2 years thereafter as contemplated by section 27A.5855, In Michigan "no claim barred by the statute of limitations shall be allowed in favor of or against the estate as a setoff or otherwise." Sec. 27.3178(419), Mich. Stat. Ann. (1962). This language has been interpreted1968 U.S. Tax Ct. LEXIS 156">*166 to mean that a claim so barred is void. Petitioner argues that Albert could have obtained the funds at any time by filing a domestic relations action against Anna, but offers no authority in support of this argument. To the contrary, Michigan law appears to hold that the period of limitations is not tolled or suspended because of the marital relationship. Section 27A.2001, Mich. Stat. Ann. (1962), 1968 U.S. Tax Ct. LEXIS 156">*168 provides that "Actions may be brought by and against a married woman as if she were unmarried." We shall deal next with petitioner's contention that the Probate Court's order was itself sufficient to satisfy Even if the Probate Court had considered the legal merits of Albert's claim, we would not be bound by its decree. 1968 U.S. Tax Ct. LEXIS 156">*170
1. All statutory references are to the Internal Revenue Code of 1954 unless otherwise noted.↩
2. Since the taxable estate as determined by the respondent is $ 11,285.28, the petitioner is only contesting the Commissioner's determination with respect to the above two items, though there were additional similar withdrawals and deposits by Anna.↩
3.
(a) General Rule. -- For purposes of the tax imposed by
* * * * (3) for claims against the estate, and
* * * *
as are allowable by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered.↩
4.
The amounts that may be deducted as claims against a decedent's estate are such only as represent personal obligations of the decedent existing at the time of his death, * * *. Only claims enforceable against the decedent's estate may be deducted. * * *↩
5. Exceptions to the rule prohibiting waiver are not applicable here. See, e.g.,
6. Nor was the Commissioner bound since the decree was at variance with the statute of limitations of Michigan. In this context the Commissioner's regulations support his position.
Brown v. United States , 37 F. Supp. 444 ( 1941 )
Estate of Charles B. Wolf, Charles S. Wold, Frances G. Wolf,... , 264 F.2d 82 ( 1959 )
norman-a-wolfsen-and-gertrude-wolfsen-hickey-distributees-of-the-estate , 223 F.2d 111 ( 1955 )
Geisel v. Burg , 283 Mich. 73 ( 1937 )
In Re Baldwin's Estate , 311 Mich. 288 ( 1945 )