In re Estate of Marsh
307 Neb. 893
| Neb. | 2020Background
- Gale H. Marsh (decedent) created a revocable trust (1988) naming his daughters Sarah and Carla as cotrustees; Marsh retained the power to add/withdraw property by written instrument.
- Marsh formed Marsh Company (partnership) and later merged it into Marcasa, LLC (2007); over time he assigned membership interests to family members so that by 2016 the trust held a 15.62152% interest in Marcasa (Marcasa total value ≈ $12.9M).
- After Marsh died (April 6, 2017), Sarah and Carla, as cotrustees, filed a county-court petition (Mar 22, 2018) seeking determination of Nebraska inheritance tax; they reported the trust’s 15.62% Marcasa interest and paid tentative tax.
- County of Richardson objected, arguing the worksheet undervalued the estate and that many assignments were ineffective because transfers were signed by Marsh (in his individual capacity) rather than by the cotrustees/trustees.
- At a 2019 hearing (two days), the county court found the challenged assignments effective (credited transfers signed by Marsh), denied the County’s continuance request, adjusted the valuation discount from 30% to 25% (raising tax slightly), and overruled the County’s objections; County appealed.
Issues
| Issue | Plaintiff's Argument (Cotrustees) | Defendant's Argument (County) | Held |
|---|---|---|---|
| Whether published notice was required to confer county-court subject-matter jurisdiction | Petition filing sufficed to invoke jurisdiction; published notice concerns only notice of the hearing | Statute requires published notice and absence of publication deprives court of jurisdiction | Filing the petition invokes jurisdiction; published notice is not a jurisdictional prerequisite; any failure was harmless |
| Whether the court abused its discretion by denying County’s continuance motion | Opposed delay after long pendency; prejudice to cotrustees from further postponement | Needed continuance for discovery and expert review of capital accounts and contributions | No abuse of discretion; motion made ~1.5 years after filing and County had ample time; denial affirmed |
| Whether transfers of membership interests (many signed by Marsh individually) were effective inter vivos gifts/withdrawals from the trust | Assignments signed by Marsh satisfied the trust’s withdrawal method and demonstrated donative intent, delivery, and acceptance by donees | Transfers were ineffective because only cotrustees (as trustees) could transfer trust property; signatures by Marsh were insufficient | Transfers were effective: Marsh had donative intent, instruments were in writing, donees exercised ownership (reported income); assignments valid under facts and trust terms allowing settlor withdrawal by written instrument |
| Whether Marsh retained possession or enjoyment so that Marcasa’s full value should be taxed | Long pattern of transfers reduced his ownership and income; manager role did not equal retaining full beneficial ownership | Marsh continued to manage, receive income, and exercise control, so transfers were illusory and full Marcasa value should be taxed | Court found competent evidence that Marsh’s ownership and income declined with transfers; manager status did not render transfers ineffective; 100% of Marcasa not subject to inheritance tax |
Key Cases Cited
- In re Estate of Hasterlik, 299 Neb. 630 (Neb. 2018) (standard of review for inheritance-tax determinations and probate findings)
- In re Estate of Karmazin, 299 Neb. 315 (Neb. 2018) (probate factual findings have verdict effect; appellate review limits)
- Zelenka v. Pratte, 300 Neb. 100 (Neb. 2018) (elements of a valid inter vivos gift: intent, delivery, acceptance)
- Linton v. United States, 630 F.3d 1211 (9th Cir. 2011) (LLC interests are delivered by executing papers; delivery and intent overlap)
- In re Estate of Fries, 279 Neb. 887 (Neb. 2010) (analysis of possession/enjoyment for post-transfer retention of benefits)
- Caruso v. Parkos, 262 Neb. 961 (Neb. 2002) (delivery of deed or instrument is largely a question of intent)
- In re Estate of Baer, 273 Neb. 969 (Neb. 2007) (procedural principles in probate and estate tax proceedings)