Filed March 19, 2007 -- Opinion by Judge Robert Bell
Issue: Whether a will directing the P.R. to pay estate taxes "without apportionment" required the P.R. to deduct the estate taxes prior to distribution where some legatees were to be taxed and others were exempt.
Held: The P.R. must deduct the taxes prior to distribution, effectively splitting the taxes among all legatees even though some were tax-exempt. Interestingly, the Court found that there are no cases expressly stating the standard of review for legal determinations of an Orphans' Court. In this matter, the Court of Appeals saw "no need to deviate from the standard of review that we have applied to interpretations and conclusions of law by courts of general jurisdiction."
Facts: James Russell Hoffman ("Decedent") died leaving a will instructing the P.R. to pay all estate taxes from the estate without apportionment. This is in contrast to Md. Code Ann. Tax-General 7-203(b), which exempts certain family members of the decedent from inheritance tax. In this case, three of the four legatees were family members exempt from taxation. The P.R. initially paid the inheritance taxes owed by the fourth legatee from the entire estate, so that, effectively, each legatee paid 1/4 of the taxes due by the one non-exempt legatee. Subsequently, the P.R. reversed herself and deducted the entire tax due from the share of the one non-exempt legatee. The Orphans' Court for Montgomery County affirmed the decision of the P.R.
The Court of Appeals reversed, holding that a will is to be construed to effectuate the intent of the testator. In this case, the Court found, the will was clear and should be effectuated by not apportioning the estate tax.
The full opinion is available in PDF.
Showing posts with label estates and trusts. Show all posts
Showing posts with label estates and trusts. Show all posts
Monday, March 19, 2007
Thursday, March 8, 2007
Rodeheaver v. State (Ct. of Spec. Appeals)
Filed March 6, 2007. Opinion by Judge Peter B. Krauser.
John Ellwood Hinebaugh devised a large parcel of land to the Sebolds provided they, among other things, did not alienate their interest in the property and continued to farm it. If they did not comply with the terms and conditions of the devise or disclaimed the devise, the property was to pass, under the Will, to the State of Maryland subject to the same conditions and covenants. The Will did not provide for a reversion should the State not comply with the terms and conditions.
Following the Sebolds disclaiming the devise, the State filed a complaint for declaratory judgment in the Circuit Court for Garrett County requesting the alienation provision of the Will be declared invalid and the farming provision unenforceable. Mr. Sebold, as the executor of the Will, and Shelley Rodeheaver, a residuary beneficiary whose request to intervene was granted, opposed the State’s action. The circuit court then granted the State’s subsequent motion for summary judgment. Rodeheaver acquiesced in the court’s ruling that the alienation provision was invalid but maintained on appeal that the circuit court erred in finding the condition that the property continue to be farmed was unenforceable, and if the State failed to farm the property the property would devolve to her and the other residuary beneficiaries.
In affirming the lower court’s decision, this Court reasoned that although a grantor, under Maryland law, can place conditions and restrictions on the use of the granted property, such conditions and restrictions are disfavored because the law favors the free transfer of land. So disfavored are these conditions that the Court of Appeals has declared that a will shall not be construed to create an estate on condition [subsequent] unless the intent of the grantor to make a conditional estate is otherwise clearly and unequivocally indicated, i.e., the testamentary language purporting to create such a condition must clearly state that the grant is void if the condition is not carried out. Otherwise, the grant merely expresses the grantor’s confidence that the grantee will use the property so far as may be reasonable and practicable to effect the purpose of the grant.
The Will did not include language indicating that, if the State did not comply with the farming provision, the grant to the State would become void and revert to Hinebaugh. Without such language, the property would not revert to the estate even if the original beneficiary failed to comply with the stated condition. Because, under the Will, there can be no reversion to Hinebaugh’s estate even if the State ceased to farm the property, the property cannot devolve, through a reversion, to Rodeheaver and the other residuary beneficiaries, and because there is no one else to whom, under the terms of the will, the property can devolve, the farming provision is unenforceable.
The full opinion is a available in PDF.
John Ellwood Hinebaugh devised a large parcel of land to the Sebolds provided they, among other things, did not alienate their interest in the property and continued to farm it. If they did not comply with the terms and conditions of the devise or disclaimed the devise, the property was to pass, under the Will, to the State of Maryland subject to the same conditions and covenants. The Will did not provide for a reversion should the State not comply with the terms and conditions.
Following the Sebolds disclaiming the devise, the State filed a complaint for declaratory judgment in the Circuit Court for Garrett County requesting the alienation provision of the Will be declared invalid and the farming provision unenforceable. Mr. Sebold, as the executor of the Will, and Shelley Rodeheaver, a residuary beneficiary whose request to intervene was granted, opposed the State’s action. The circuit court then granted the State’s subsequent motion for summary judgment. Rodeheaver acquiesced in the court’s ruling that the alienation provision was invalid but maintained on appeal that the circuit court erred in finding the condition that the property continue to be farmed was unenforceable, and if the State failed to farm the property the property would devolve to her and the other residuary beneficiaries.
In affirming the lower court’s decision, this Court reasoned that although a grantor, under Maryland law, can place conditions and restrictions on the use of the granted property, such conditions and restrictions are disfavored because the law favors the free transfer of land. So disfavored are these conditions that the Court of Appeals has declared that a will shall not be construed to create an estate on condition [subsequent] unless the intent of the grantor to make a conditional estate is otherwise clearly and unequivocally indicated, i.e., the testamentary language purporting to create such a condition must clearly state that the grant is void if the condition is not carried out. Otherwise, the grant merely expresses the grantor’s confidence that the grantee will use the property so far as may be reasonable and practicable to effect the purpose of the grant.
The Will did not include language indicating that, if the State did not comply with the farming provision, the grant to the State would become void and revert to Hinebaugh. Without such language, the property would not revert to the estate even if the original beneficiary failed to comply with the stated condition. Because, under the Will, there can be no reversion to Hinebaugh’s estate even if the State ceased to farm the property, the property cannot devolve, through a reversion, to Rodeheaver and the other residuary beneficiaries, and because there is no one else to whom, under the terms of the will, the property can devolve, the farming provision is unenforceable.
The full opinion is a available in PDF.
Friday, January 5, 2007
Dougherty v. Rubenstein (Ct. of Special Appeals)
Filed January 4, 2007 — Opinion by Judge Deborah Eyler.
The "insane delusion rule" was created in Britain nearly two centuries ago, in 1826, devised to cover a gap between "idiots and persons of non-sane memory", who are without testamentary capacity, and a person "who knew the natural objects of his or her bounty, the nature and extent of his or her property, and could make a 'rational' plan for disposition, but who nonetheless was as crazy as a March hare", who could enter into a valid will.
In the seminal British case, Dew v. Clark, a father became unalterably convinced that his very young daughter was gross, wicked, depraved, vile, deceitful, and violent, a "child of the devil". He subsequently entered into a will disinheriting his daughter, then died three years later, after having been declared in chancery as being of unsound mind. In the caveat proceeding, the evidence showed that the daughter was known by all for her good disposition, and that the father had boasted about his good treatment of the daughter when the opposite was actually true. The father's behavior was otherwise usual, except for his warped thinking about the daughter, which "did and could only proceed from, and be founded in, insanity." The Dew court found that the father's "partial insanity" or "monomania" (insanity about a particular subject) had caused him to disinherit his daughter, and thus held the father to have been without testamentary capacity when he made his will, and set it aside. The "insane delusion rule" created in Dew was subsequently adopted in Maryland in the 1848 case of Townsend v. Townsend, but applied only rarely, in seven subsequent cases, the latest in 1973.
In this case, the insane delusion rule was invoked in an effort to set aside the 1998 will of James J. Dougherty, III ("James") by his son, James J. Dougherty, IV ("Jay"). The will had disinherited Jay, and, he claimed, was a product of an insane delusion that Jay had stolen his father's money. After his father's death in 2004, Jay sought to be appointed PR of the estate, and to not have the will admitted into probate. The Orphan's Court held evidenciary hearings in 2005. The testimony revealed a rocky relationship between James and Jay, beginning with James' divorce from Jay's mother. They reconciled four years later, and were close for seven more years. In 1990, James executed a will, leaving his estate to Jay.
In the 1990's, James' health deteriorated, due largely to alcohol abuse and prescription narcotics. In 1997, James suffered a minor stroke, and was diagnosed with congestive heart failure and an enlarged heart due to the alcohol abuse. During the hospitalization, James was often disoriented and confused, and had trouble expressing himself or understanding what was being said to him. He was transferred to the hospital's psychiatric unit, where he was diagnosed with dementia, a "lifelong" and "permanent" condition.
Based upon the doctors' advice, Jay decided to place James in a nursing or boarding home in 1998. James was, by all accounts, miserable in the home, and sought help from his visitors to get out. Conditions in the home were by all accounts rather grim, and James correctly blamed Jay for placing him there, and refused to have nothing to do with him. When Jay was away, James' sister (the "Rubenstein" who was later James' PR and a party to this case) removed him from the home and returned him to his house. Upon Jay's return, he returned his father's financial records to him, whereupon James lashed out at him, accusing him of stealing his money and saying that, for him, Jay did not exist.
In subsequent weeks and months, James appointed his sister his attorney in fact, and his heart condition was cared for by a doctor for whom the sister worked. He had a new will drafted, which disinherited his son, over the cautions of his attorney, He lived alone until his death in 2004, largely self-sufficient and in general appearing competent to care for himself. Although there was never any evidence that Jay had actually stolen anything from him, James maintained that he had, and that he had for that reason cut him out of his will. He also complained that Jay had placed him in the home, intending the stay to be permanent.
After the hearings, the Orphans Court judge found that, while a patient in the hospital in 1997 and early 1998, he was clearly without capacity to make a will, although he rejected the diagnosis of permanent and progressive dementia, based on James' subsequent improvement. Based on that improvement, other than the possible issue of an insane delusion, James was found competent to have made the 1998 will. The judge found that James' belief that his son had stolen from him was in fact a delusion, but was unable to conclude that the delusion was the product of a mental disease, and so admitted the will to probate.
On appeal, Jay argued that the judge had applied an incorrect standard to the determination, by requiring a separate determination that the delusion was caused by a mental illness.
In addressing the issue, the Court of Special Appeals (the "Court") noted that, to be valid, a will must be executed by a testator who is of age and legally competent. To rebut the presumption of competence, one must prove either permanent insanity or that the testator was of unsound mind when the will was made. An "insane delusion" or "monomania" is an unsoundness of mind that will invalidate the will if the delusion produced the disposition made in the will. The delusion must be "insane" and the will must be the product of the insane delusion, however. An insane delusion is "a belief in things impossible, or a belief in things possible, but so improbable under the surrounding circumstances, that no man of sound mind could give them credence." Mere eccentricity, peculiar beliefs or aversion to one relative or another are not, standing alone, insane delusions, nor is an insane delusion a general condition, but rather is directed toward some specific object, a person or thing.
The Court them carefully reviewed in detail the three prior Maryland cases where an insane delusion had been found or upheld, finding common features: all were negative false beliefs about the character of a close relative, unconnected to any reality or true experience but only existing in the testator's mind. The obect of the hostility had not only not done the specific acts charged, but in fact had done nothing that could account for the testator's hostility, leaving insanity as the only explanation for the delusion.
Turning to the case at hand, the Court was not convinced the judge had added an additional element by seeking an underlying mental disease, but was merely using "mental disease" as an alternative to "insanity," correctly formulating that more than a mere delusion is needed, namely an "insane delusion." The Court also upheld the judge's determination that the testator's delusion found in this case was not "insane" within the meaning of the rule. The Court distinguished the earlier cases, in which there was no alternate explanation for the delusion other than insanity. Here, the delusion arose while James was a resident, not by choice, of the home, a condition for which James accurately blamed Jay, and arose as an outgrowth of James' stubborn conviction that Jay had "done something wrong" by "imprisoning" him at the home. Although false, the Court found that James' conviction, though it led him to disinherit his son, was not "an inexplicable delusion that only could have come into being as a product of an insane mind," and upheld the judge's conclusion as a reasonable interpretation.
The full opinion is available in WordPerfect and PDF.
The "insane delusion rule" was created in Britain nearly two centuries ago, in 1826, devised to cover a gap between "idiots and persons of non-sane memory", who are without testamentary capacity, and a person "who knew the natural objects of his or her bounty, the nature and extent of his or her property, and could make a 'rational' plan for disposition, but who nonetheless was as crazy as a March hare", who could enter into a valid will.
In the seminal British case, Dew v. Clark, a father became unalterably convinced that his very young daughter was gross, wicked, depraved, vile, deceitful, and violent, a "child of the devil". He subsequently entered into a will disinheriting his daughter, then died three years later, after having been declared in chancery as being of unsound mind. In the caveat proceeding, the evidence showed that the daughter was known by all for her good disposition, and that the father had boasted about his good treatment of the daughter when the opposite was actually true. The father's behavior was otherwise usual, except for his warped thinking about the daughter, which "did and could only proceed from, and be founded in, insanity." The Dew court found that the father's "partial insanity" or "monomania" (insanity about a particular subject) had caused him to disinherit his daughter, and thus held the father to have been without testamentary capacity when he made his will, and set it aside. The "insane delusion rule" created in Dew was subsequently adopted in Maryland in the 1848 case of Townsend v. Townsend, but applied only rarely, in seven subsequent cases, the latest in 1973.
In this case, the insane delusion rule was invoked in an effort to set aside the 1998 will of James J. Dougherty, III ("James") by his son, James J. Dougherty, IV ("Jay"). The will had disinherited Jay, and, he claimed, was a product of an insane delusion that Jay had stolen his father's money. After his father's death in 2004, Jay sought to be appointed PR of the estate, and to not have the will admitted into probate. The Orphan's Court held evidenciary hearings in 2005. The testimony revealed a rocky relationship between James and Jay, beginning with James' divorce from Jay's mother. They reconciled four years later, and were close for seven more years. In 1990, James executed a will, leaving his estate to Jay.
In the 1990's, James' health deteriorated, due largely to alcohol abuse and prescription narcotics. In 1997, James suffered a minor stroke, and was diagnosed with congestive heart failure and an enlarged heart due to the alcohol abuse. During the hospitalization, James was often disoriented and confused, and had trouble expressing himself or understanding what was being said to him. He was transferred to the hospital's psychiatric unit, where he was diagnosed with dementia, a "lifelong" and "permanent" condition.
Based upon the doctors' advice, Jay decided to place James in a nursing or boarding home in 1998. James was, by all accounts, miserable in the home, and sought help from his visitors to get out. Conditions in the home were by all accounts rather grim, and James correctly blamed Jay for placing him there, and refused to have nothing to do with him. When Jay was away, James' sister (the "Rubenstein" who was later James' PR and a party to this case) removed him from the home and returned him to his house. Upon Jay's return, he returned his father's financial records to him, whereupon James lashed out at him, accusing him of stealing his money and saying that, for him, Jay did not exist.
In subsequent weeks and months, James appointed his sister his attorney in fact, and his heart condition was cared for by a doctor for whom the sister worked. He had a new will drafted, which disinherited his son, over the cautions of his attorney, He lived alone until his death in 2004, largely self-sufficient and in general appearing competent to care for himself. Although there was never any evidence that Jay had actually stolen anything from him, James maintained that he had, and that he had for that reason cut him out of his will. He also complained that Jay had placed him in the home, intending the stay to be permanent.
After the hearings, the Orphans Court judge found that, while a patient in the hospital in 1997 and early 1998, he was clearly without capacity to make a will, although he rejected the diagnosis of permanent and progressive dementia, based on James' subsequent improvement. Based on that improvement, other than the possible issue of an insane delusion, James was found competent to have made the 1998 will. The judge found that James' belief that his son had stolen from him was in fact a delusion, but was unable to conclude that the delusion was the product of a mental disease, and so admitted the will to probate.
On appeal, Jay argued that the judge had applied an incorrect standard to the determination, by requiring a separate determination that the delusion was caused by a mental illness.
In addressing the issue, the Court of Special Appeals (the "Court") noted that, to be valid, a will must be executed by a testator who is of age and legally competent. To rebut the presumption of competence, one must prove either permanent insanity or that the testator was of unsound mind when the will was made. An "insane delusion" or "monomania" is an unsoundness of mind that will invalidate the will if the delusion produced the disposition made in the will. The delusion must be "insane" and the will must be the product of the insane delusion, however. An insane delusion is "a belief in things impossible, or a belief in things possible, but so improbable under the surrounding circumstances, that no man of sound mind could give them credence." Mere eccentricity, peculiar beliefs or aversion to one relative or another are not, standing alone, insane delusions, nor is an insane delusion a general condition, but rather is directed toward some specific object, a person or thing.
The Court them carefully reviewed in detail the three prior Maryland cases where an insane delusion had been found or upheld, finding common features: all were negative false beliefs about the character of a close relative, unconnected to any reality or true experience but only existing in the testator's mind. The obect of the hostility had not only not done the specific acts charged, but in fact had done nothing that could account for the testator's hostility, leaving insanity as the only explanation for the delusion.
Turning to the case at hand, the Court was not convinced the judge had added an additional element by seeking an underlying mental disease, but was merely using "mental disease" as an alternative to "insanity," correctly formulating that more than a mere delusion is needed, namely an "insane delusion." The Court also upheld the judge's determination that the testator's delusion found in this case was not "insane" within the meaning of the rule. The Court distinguished the earlier cases, in which there was no alternate explanation for the delusion other than insanity. Here, the delusion arose while James was a resident, not by choice, of the home, a condition for which James accurately blamed Jay, and arose as an outgrowth of James' stubborn conviction that Jay had "done something wrong" by "imprisoning" him at the home. Although false, the Court found that James' conviction, though it led him to disinherit his son, was not "an inexplicable delusion that only could have come into being as a product of an insane mind," and upheld the judge's conclusion as a reasonable interpretation.
The full opinion is available in WordPerfect and PDF.
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