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11/19/87 In Re Estate of Bertha M. Martin

November 19, 1987



Nickelson, Ex'r, Respondent-Appellee, v.

Douglas Olivero et al., Petitioners-Appellants)

515 N.E.2d 1312, 162 Ill. App. 3d 638, 114 Ill. Dec. 41 1987.IL.1722

Appeal from the Circuit Court of Piatt County; the Hon. John P. Shonkwiler, Judge, presiding.


JUSTICE GREEN delivered the opinion of the court. LUND and KNECHT, JJ., concur.


This appeal concerns the estate of Bertha M. Martin, who died July 2, 1983. On July 10, 1983, the circuit court of Piatt County admitted her will to probate and appointed her daughter Phyllis Joanne Nickelson executor. The will devised certain tracts of land to a trustee for the benefit of that daughter and her family. Three other tracts were respectively devised to (1) her daughter Imogene Smith; (2) her daughter Berentha Laverne Connell; and (3) her grandchildren Douglas, David, Philip, and Marcia Olivero, children of her living daughter, Mary Louise Olivero, in equal shares. The residue was devised in equal shares to Smith, Connell, and Nickelson per stirpes.

This appeal is taken by the Olivero children from an order entered on February 3, 1987, ruling upon a petition of the executor filed July 11, 1986, in the course of the administration of the estate and entitled "Petition In Respect of Apportionment of Costs of Administration and Estate Taxes." The legal issues presented concern the circuit court's determination of: (1) whether sufficient assets were available in the residue of the estate to pay the foregoing items; (2) if such assets were not available, in what manner should responsibility to make those payments be apportioned against the various devisees; and (3) whether, in any event, a certain portion of Federal estate taxes should be apportioned against the devise to the Olivero children, because only they had refused to have their property evaluated, for estate tax purposes, by the "qualified use" method (26 U.S.C. § 2032A (1982)) which evaluation would have substantially reduced the tax burden upon the estate. We hold that several findings by the circuit court were proper but that further hearing is necessary to determine whether a shortage existed in the residue. We affirm in part, reverse in part, and remand with directions.

More particularly, the order appealed ruled (1) prior to payment of estate taxes and costs and expenses of administration, the residue had a value of $152,423.91; (2) the agreed amount to discharge those obligations was: (a) costs of administration, $47,827.41, (b) Federal estate taxes, $177,068.98, and (c) State inheritance taxes, $24,395.65, for a total sum of $249,292.04; (3) the deficit was, thus, $96,868.13; (4) of that deficit, the sum of $35,425.65 was apportioned against the devise to the Olivero children, because their refusal to accept the "qualified use" method of evaluation enhanced the total Federal estate taxes assessed against the estate; (5) the balance of the deficit in the sum of $61,442.48 was apportioned against all the various devisees based upon the percentage which the evaluation of each devise bore to the total evaluation of all the devises; and (6) the income from the devised property during administration should be divided among the devisees in a manner not in dispute.

The court also found that acts of Nickelson and Connell, in advancing funds for deposit in the executorship account, which they had received from savings accounts which, at the time of the decedent's death stood in the name of the decedent and one or both of them, did not negate their right to be reimbursed from the estate for those funds. This determination was significant because, if reimbursement was not required, the residue of the estate would have been sufficient to pay all charges against the estate.

The major dispute between the parties concerns the previously mentioned savings accounts. On July 13, 1983, those accounts, in the name of decedent, Nickelson, and Connell, had a principal and interest balance of $91,507.18. Those in the names of decedent and Connell had such a balance of $50,670.04 and those in the names of decedent and Nickelson had such a balance of $145,465. Neither the petition for probate of the will nor the inventory gave any indication that those accounts were considered to be assets of the estate, but reports and accounts filed with the court showed these funds as received by the executor without any designation which required reimbursement for those funds. The Oliveros contend that these accounts were assets of the estate, because they were set up by or on behalf of the decedent with her funds and without any intent on her part to create rights of survivorship in the daughters listed as coowners. The circuit court held that this issue was not properly before the court. The Oliveros maintain that it was and should have been decided in their favor.

The Oliveros also complain of the circuit court rulings that (1) a substantial deficit existed in the residue of the estate because Nickelson or Connell were entitled to be reimbursed for the sum of $286,007.38 which they had advanced to the estate; and (2) because of this deficiency, the Oliveros' devise was to have apportioned to it an additional charge of $35,425.65. The amount of that apportionment was based upon the added Federal estate taxes imposed upon the estate because of the election of the Oliveros not to use the "qualified use" formula in evaluating the tract devised to them.

We consider first the question of the ownership of the savings accounts standing in the name of decedent and Nickelson or Connell, or both of them, at the time of the decedent's death. No responsive pleadings were filed to the petition seeking apportionment. Accordingly, the parties agreed that after the hearing on the petition was over, they would present to the court a written agreement as to the issues to be decided by the court. This was done, and the court took the matter under advisement. In reaching its decision, the court concluded that the question of whether the decedent had "donative intent" ...

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