DocketNumber: Docket No. 9117-82
Citation Numbers: 84 T.C. 75, 1985 U.S. Tax Ct. LEXIS 133, 84 T.C. No. 5
Judges: Korner
Filed Date: 1/17/1985
Status: Precedential
Modified Date: 1/13/2023
1985 U.S. Tax Ct. LEXIS 133">*133
84 T.C. 75">*76
This case was submitted to the Court under the provisions of Rule 122, upon a set of stipulated facts and exhibits. The stipulation of facts and joint exhibits attached thereto are incorporated herein by this reference and form the basis of our findings of fact.
Petitioner is the Estate of James O. Snider (hereinafter referred to, interchangeably, as the estate or petitioner). Kandace Snider Lindsey filed the petition herein in her capacity as executrix of the Estate; she resided in Dallas, Texas, at the time the petition was filed.
James O. Snider and Gladys G. Snider were married on September 15, 1934, and lived together as husband and wife until the death of Gladys G. Snider on September 14, 1970. Two children were born of the marriage, Larry G. Snider and Kandace Snider Lindsey. On July 23, 1971, James O. Snider executed a last will and testament.
James O. Snider1985 U.S. Tax Ct. LEXIS 133">*136 and Rosalie Snider were married on October 3, 1972, and lived together as husband and wife until the death of James O. Snider (hereinafter referred to as decedent) on November 18, 1977. Decedent left his entire 84 T.C. 75">*77 estate to his two children by his first marriage, equally; no provision was made for the surviving spouse under the will. Decedent's will was duly probated, and Kandace Snider Lindsey and Larry G. Snider, decedent's children by his first marriage, were appointed independent coexecutors of the estate.
On May 25, 1978, Rosalie Snider (hereinafter referred to as the widow) sued the independent coexecutors of the estate for an accounting between decedent's separate estate and their community estate in the Probate Court of Dallas County, Texas;
The probate court entered judgment in favor of the widow and against the estate, in the amount of $ 69,366.89, on November 26, 1979. This amount included: (1) The widow's share of the net reimbursement to the community property by decedent's estate after reduction by the moneys owed by the widow to the estate, 3 plus (2) a widow's allowance of $ 13,750. The estate appealed the determination involving the charges made to decedent's separate estate to the Court of Civil Appeals for the Fifth Supreme Judicial District of Texas, at Dallas. The Court of Civil Appeals reduced the amount of the judgment to $ 44,603.46; the amount of the widow's allowance therein was not modified. The judgment of the Court of Civil Appeals has become final.
84 T.C. 75">*78 Petitioner's Federal estate tax return, filed on February 22, 1979, some 4 months prior to the widow's petition for an allowance, claimed no entitlement to a marital deduction in regard to this allowance, but such claim was made in the petition to this Court filed on April 28, 1982. 5
OPINION
Petitioner1985 U.S. Tax Ct. LEXIS 133">*139 contends that the Texas widow's allowance is subject to the marital deduction and is not taxable as a terminable interest. Petitioner argues, further, that the amount of the marital deduction is the full $ 13,750, without reduction for the widow's one-half share of the community property. In support of this contention, petitioner argues that: (1) The estate consisted of decedent's half of the community property in the amount of $ 32,202.51, and decedent's separate property in the
1985 U.S. Tax Ct. LEXIS 133">*140 Respondent determined, in his notice of deficiency, that the widow's allowance under Texas law is a terminable interest, and, therefore, did not qualify for the marital deduction. Alternatively, respondent contends that if the Texas widow's allowance qualifies for the marital deduction, the amount of said deduction is limited to $ 6,875. In support of this contention, respondent argues that the allowance should be charged against the full community estate of the deceased husband and the surviving wife, so that the widow's half will bear its burden of such charge.
84 T.C. 75">*79 The case appears to be one of first impression in the Federal courts, including this Court.
In order for the widow's allowance to qualify for the marital deduction, and thus escape the terminable interest limitation, the widow's interest therein must be indefeasible and unconditional as of the moment of decedent's death.
The issue for resolution is thus whether the widow's interest in the allowance provided by Texas Law is indefeasible and unconditional as of the moment of decedent's death, or whether it would "terminate or fail upon the occurrence of an 84 T.C. 75">*80 event or contingency, or on the failure of an event or contingency to occur." Such determination is to be made in accordance with State law.
The right to a widow's allowance is purely statutory, and is not derived from the common law.
1985 U.S. Tax Ct. LEXIS 133">*146 In fixing the allowance, the facts or circumstances existing at the time of the husband's death, and those anticipated to exist during the first year after such death, shall be regarded.
In the event of a widow's death, one who had furnished her with necessities and had become her creditor bona fide, has a right in equity to be substituted to her rights against the estate of her deceased husband.
1985 U.S. Tax Ct. LEXIS 133">*148 84 T.C. 75">*82 Once the allowance has been fixed and an order has been entered stating the amount thereof and the method of payment, viz, whether in a lump sum or in installments, the order has the force of a judgment and cannot be collaterally impeached. Tex. Prob. Code Ann. sec 289 (Vernon 1980);
No allowance is to be made when the widow has separate property1985 U.S. Tax Ct. LEXIS 133">*149 adequate for her maintenance.
In
While all judicial determinations must be based on the circumstances of each case, they must also be based on the law applicable to each case. It cannot be seriously argued that a court's discretion is ever1985 U.S. Tax Ct. LEXIS 133">*150 broad enough to justify disregarding clear and unequivocal statutory mandates.
[
The aforementioned statutes and cases leave no doubt that the Court is required as a matter of law, to make a determination as to whether the widow has separate property adequate for her maintenance. Should the Court find that she has no such property, an allowance, in a sufficient amount to support the widow for 1 year after her husband's death, shall be fixed.
Petitioner contends that since the Texas allowance is similar to widow's allowances in Michigan and Ohio, cases interpreting the Michigan and Ohio statutes are highly persuasive and indicate what interpretation the Texas Supreme Court would give to1985 U.S. Tax Ct. LEXIS 133">*153 the statutes granting the allowance; petitioner cites
In
1985 U.S. Tax Ct. LEXIS 133">*154 It is clear to us that the entitlement of the widow to a year's allowance under Texas law is contingent upon the widow's not having separate property adequate for her maintenance, as determined by the Texas probate court. An interest that might never come into being, should the widow have separate property adequate for her maintenance for 1 year after her husband's death, is not indefeasible and unconditional as of the moment of decedent's death. This is fatal under
We conclude that the widow's allowance provided by Texas law is a terminable interest that does not qualify for the marital deduction under
To give effect to the above, as well as concessions by the parties on other issues herein,
1. Included amongst the concessions is petitioner's acknowledgment that respondent's motion for partial summary judgment upon the ground that the value of decedent's homestead property is includable in his gross estate without reduction for the value of any rights of the surviving spouse is in accordance with
2. All statutory references are to the Internal Revenue Code of 1954 as in effect in the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise noted.↩
3. In other words, the widow's share of the excess of debits to decedent's separate property, over the debits to the widow's separate property.↩
4. Consistent with the determinations of the Court of Civil Appeals, the classification of the property in decedent's estate as community or separate, and the values thereof, have been agreed upon by the parties.↩
5. Petitioner claimed entitlement to a marital deduction in the amount of the widow's allowance in the administrative proceeding before the Internal Revenue Service. Respondent disallowed the claimed deduction in the statutory notice of deficiency.↩
6. Before payment of funeral expenses, debts, taxes, and administrative costs.↩
7.
8.
(1) General Rule. -- Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest -- (A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money's worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and (B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;↩
9. In general, the terminable interest rule seeks to assure the possibility of (1) interspousal transfers free of a transfer tax, and (2) the imposition of such tax when the property is transferred to others, by allowing the marital deduction only where the nature of the interest passing to the surviving spouse is such that, if retained until death, it will be taxed in the survivor's estate. If the interest acquired by the surviving spouse is not such as would, if held until death, subject the survivor's estate to liability, it will automatically be a deductible interest. However, the converse is not always true; an interest may be nondeductible even though it may cause estate tax liability upon the death of the surviving spouse. R. Stephens, G. Maxfield & S. Lind, Federal Estate and Gift Taxation, par. 5.06[7][b], at 5-83 (5th ed. 1983).↩
10. The statutory provisions pertaining to the award of a widow's allowance are found in
Immediately after the inventory, appraisement, and list of claims have been approved, the court shall fix a family allowance for the support of the widow and minor children of the deceased.
Such allowance shall be of an amount sufficient for the maintenance of such widow and minor children for one year from the time of the death of the testator of intestate. The allowance shall be fixed with regard to the facts or circumstances then existing and those anticipated to exist during the first year after such death. The allowance may be paid either in a lump sum or in installments, as the court shall order.
No such allowance shall be made for the widow when she has separate property adequate to her maintenance; nor shall such allowance be made for the minor children when they have property in their own right adequate to their maintenance.
When an allowance has been fixed, an order shall be entered stating the amount thereof, providing how the same shall be payable, and directing the executor or administrator to pay the same in accordance with law.
The family allowance made for the support of the widow and minor children of the deceased shall be paid in preference to all debts or charges against the estate, except expenses of the funeral and last sickness of the deceased.
11. Historically, the purpose of the allowance statutes was to protect the widow who had been deprived, by the death of her husband, of the means of support which she was accustomed to receive during his lifetime. In pursuance of this policy, the widow was entitled, in order to secure temporary support and reasonable means with which to begin anew the contest for subsistence, to receive an allowance for a year's support from the estate of her husband.
12. The filing of an application is, however, encouraged, in order for the widow to provide such information to the court as will enable it to act intelligently.
13. Dicta in
14. Cf.
15. This provision was repealed by Pub. Acts 1978, No. 642, effective July 1, 1979.↩
Jack E. Golsen and Sylvia H. Golsen v. Commissioner of ... , 445 F.2d 985 ( 1971 )
estate-of-j-f-darby-don-c-bothwell-and-william-f-hendrick-executors , 323 F.2d 792 ( 1963 )
United States v. Herbert R. Edmondson, as of H. L. ... , 331 F.2d 676 ( 1964 )
Estate of J. Wendell Green, Deceased, William B. Martman ... , 441 F.2d 303 ( 1971 )
Estate of Helen M. Johnson, Deceased, Lolita McNeill Muhm, ... , 718 F.2d 1303 ( 1983 )
Hamilton National Bank of Knoxville, of the Estate of John ... , 353 F.2d 930 ( 1965 )
United States v. Louise M. Quivey and Robert G. Simmons, Jr.... , 292 F.2d 252 ( 1961 )
Noble v. Noble , 636 S.W.2d 551 ( 1982 )
Gonzalez v. Guajardo De Gonzalez , 541 S.W.2d 865 ( 1976 )
Kennedy v. Draper , 575 S.W.2d 627 ( 1978 )
First Nat. Bank in Orange v. MacFarlane , 160 S.W.2d 969 ( 1942 )
McCanless v. Devenport , 40 S.W.2d 903 ( 1931 )
Hall v. Fields , 81 Tex. 553 ( 1891 )
Jackson v. United States , 84 S. Ct. 869 ( 1964 )
Jones v. Bartlett , 189 S.W. 1107 ( 1916 )
Ellis v. Emil Blum Co. , 242 S.W. 1101 ( 1922 )
San Angelo Nat. Bank v. Wright , 66 S.W.2d 804 ( 1933 )
King v. Battaglia , 38 Tex. Civ. App. 28 ( 1905 )
Bente v. Sullivan , 52 Tex. Civ. App. 454 ( 1908 )