ESTATE OF Gilbert M. DENMAN Jr., Deceased
2011 Tex. App. LEXIS 9262
| Tex. App. | 2011Background
- Thuss seeks reimbursement or a grossing up from the Denman estate for GST tax charged to the El Capote Ranch bequest.
- The Trust Company and Trinity University (and the SA Museum of Art) argue the GST tax must be charged to the Ranch under 26 U.S.C. §2603(b) because Article XII does not contain a sufficiently specific reference to the tax.
- In Denman I, the court held the GST tax must be charged to the Ranch due to lack of a specific reference, noting a possible state-law reimbursement claim was not before the court.
- Died in 2004, Denman’s will left half the residuary to Trinity and the other half to the Trust Company/ coexecutor as trustees; Thuss was devised the El Capote Ranch.
- The GST tax attributed to the Ranch totaled $913,868; the tax return apportioned and paid by the estate charged to the Ranch.
- Thuss filed a declaratory judgment in 2009 seeking reimbursement or grossing up, and The Trust Company moved for summary judgment, which the probate court granted, with Thuss appealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Limitation on Thuss’s reimbursement claim | Thuss argues limitations should not bar claims seeking reimbursement based on Denman’s intent | The Trust Company contends four-year limitations apply and accrue when a controversy arises | Limitation barred the claim; court did not reach merits on reimbursement |
| Controversy and accrual date under limitations | Controversy began only after Denman I; accrual should be after August 2008 | Controversy existed by February 2005 regarding who pays GST tax; accrual earlier | Actual controversy existed by Feb. 2, 2005; suit filed in 2009 outside four years |
| Scope of state-law reimbursement vs. federal charge under §2603(b) | Denman’s intent requires reimbursement from residuary | Federal law controls whether GST tax is charged to property absent specific will reference | Court did not decide merits after holding limitations barred; not reaching merits of reimbursement |
| Effect of Denman I footnote on later claims | Footnote suggested state-law reimbursement claim not before court | Footnote clarifies limits of Denman I; does not overrule limitations issue | Footnote not controlling on limitations; limitations barred later claim |
Key Cases Cited
- Estate of Denman, 270 S.W.3d 639 (Tex. App.—San Antonio 2008) (GST tax allocation; denial of state-law reimbursement in Denman I)
- U.S. v. Ray Thomas Gravel Co., 380 S.W.2d 576 (Tex. 1964) (controlling federal tax principle on explicit reference)
- Williams v. Khalaf, 802 S.W.2d 651 (Tex. 1990) (four-year limitations period; accrual under Civil Practice & Remedies Code)
- Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264 (Tex. 2004) (accrual and limitations standards for claims in Texas)
- Pustejovsky v. Rapid-American Corp., 35 S.W.3d 643 (Tex. 2000) (limitations and accrual principles)
- Doncaster v. Hernaiz, 161 S.W.3d 594 (Tex. App.—San Antonio 2005) (evidence admissibility and abuse of discretion standard)