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Friday, July 23, 2010

Ind. Decisions - Decision from yesterday now posted by Tax Court

In Indiana Dept. of State Revenue, Inheritance Tax Division v. Estate of Katherine S. Boehle, Deceased, an 11-page opinion, Judge Fisher writes re a special needs/disability trust:

The Indiana Department of State Revenue, Inheritance Tax Division (Department) appeals the Marion Superior Court Probate Division's (probate court) denial of its motion to correct error. The issue for review, as restated by the Court, is whether the probate court erred in determining the Estate's inheritance tax liability. * * *

The Trust in this case is similar to other special needs/disability trusts in that it was designed to ensure that Dale's income interest (i.e., the income he may receive) would not prohibit his access to either private or public assistance benefits. See, e.g., State v. Hammans, 870 N.E.2d 1071, 1080 (Ind. Ct. App. 2007) (explaining that disability trusts are created to serve two purposes: 1) to benefit certain Medicaid recipients; and 2) to provide such recipients with supplemental care increasing the quality of their lives “after assistance from governmental and private agencies has been exhausted, and not to replace such assistance”). This does not mean, however, that Dale's interest in the Trust was perpetually set at zero; rather, it means that his interest in the Trust fluctuated and would be zero (i.e., he would not receive a disbursement) when income received would render him ineligible for federal/state aid. [cite omitted] Accordingly, on the date of Katherine's death, the precise value of each of the beneficiary's interests in the Trust was not readily ascertainable because their interests were contingent on the occurrence of other events and factors. Therefore, this Court cannot say that the probate court erred when it determined the Estate's inheritance tax liability under Indiana Code § 6-4.1-6-4.

For the above stated reasons, the Court AFFIRMS the probate court's denial of the Department's motion to correct error.

Posted by Marcia Oddi on July 23, 2010 10:21 AM
Posted to Ind. Tax Ct. Decisions