First Nat. Bank of Oregon v. Department of Revenue, State of Or., 1457
Decision Date | 16 November 1982 |
Docket Number | No. 1457,1457 |
Citation | 294 Or. 60,653 P.2d 985 |
Parties | FIRST NATIONAL BANK OF OREGON, Personal Representative of the Estate of Anna Berliner, Deceased, Plaintiff-Appellant, v. DEPARTMENT OF REVENUE, STATE OF OREGON, Defendant-Respondent. ; SC 28392. . * |
Court | Oregon Supreme Court |
Brad Littlefield, Portland, argued the cause for plaintiff-appellant. On the briefs were Gerson F. Goldsmith and Goldsmith, Siegel, Engel & Littlefield, Portland.
Ted E. Barbera, Asst. Atty. Gen., Salem, argued the cause for defendant-respondent. With him on the brief was Dave Frohnmayer, Atty. Gen., Salem.
Plaintiff seeks review of a decision of the Oregon Tax Court denying a claim for refund of inheritance taxes which were paid as the result of the probate of an estate. The facts have been stipulated and are stated here as set out in the opinion of the tax court.
The personal representative then filed a complaint in the Tax Court claiming that the amount paid to the trustees as a result of the settlement should be allowed as a deduction from the estate for state inheritance tax purposes under ORS 118.070(1)(a) as a claim against the estate. The Tax Court affirmed the denial of a refund; we affirm the Tax Court.
Former ORS 118.070(1)(a) provided at the time of decedent's death:
Plaintiff and defendant argue at some length over whether plaintiff's claim is "against the estate" or "to the estate." The Tax Court, relying on Weill v. Clark's Estate, 9 Or. 387 (1881) concluded the compromise settlement was not a claim against the estate. It quoted Weill:
"The word 'claim' means a 'legal demand for money to be paid out of the estate.' [Citation omitted.]
The Tax Court continued:
Hartung v. Unander, 224 Or. 165, 169, 355 P.2d 738 (1960) points out that various jurisdictions treat settlements in will contests differently.
" * * * Some hold that the sums paid to contestants are expenses of the estate and thus not inherited at all; others, that the nature of the settlement is determined by the nature of the claim and, therefore, sums paid in settlement of a claim of heirship are inherited by the recipient and the recipient taxed. Still others hold that the settlement paid by the legatees to the contestants is no more than an assignment of a portion of the legatee's right of inheritance which he may dispose of as he sees fit and, therefore, the tax falls upon the legatee. See 36 ALR2d 917; 29 Columbia Law Rev. 1164 (1929). * * * "
The latter rule, as the opinion states, had been followed in Oregon by the State Treasurer. An Attorney General's opinion, 1 cited in Hartung, states that (Emphasis added in Hartung.) 224 Or. at 169-70, 355 P.2d 738.
The Attorney General's opinion relied on R. Kidder, State Inheritance Taxation and Taxability of Trusts 28 (1934) and the Hartung case quoted from that text:
" 'The descent of property held by inheritance or devise is regulated entirely by statutory provisions, and under the inheritance tax laws, the property so passing is subject to tax at certain specified rates and is due at the death of the decedent; that to permit the heirs, legatees and parties interested in an estate to change by agreement among themselves, after the death of a testator or decedent, the proportionate amounts of the property on which the respective beneficiaries should pay an inheritance tax, might, in some instances, practically deprive the state of all power of collecting any inheritance tax; that the rights of the state to inheritance tax are fixed as of the date of the death of a decedent, and those rights cannot be annulled or abridged by any subsequent agreement between the parties interested in the estate of the decedent.' " 224 Or. at 170, 355 P.2d 738.
This court in Hartung expressed its approval of the rule followed by the State Treasurer to "the effect that the inheritance tax is to be determined by the adjudicated rights of legatees, devisees and heirs to share in the estate of a deceased party as of the time of death and not by what the parties may thereafter agree among themselves each shall receive, * * *." 224 Or. at 173, 355 P.2d 738.
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