Opinion ID: 2225358
Heading Depth: 1
Heading Rank: 5

Heading: genuine issue whether lyle retained at death possession or enjoyment of, or right to income from, the properties

Text: Under Neb.Rev.Stat. § 30-2313(a) (Reissue 2008), a surviving spouse has a right to take an elective share of a decedent's estate in any fraction not in excess of one-half of the augmented estate under the limitations and conditions hereinafter stated. At issue in this appeal is the application of Neb.Rev.Stat. § 30-2314 (Reissue 2008), which establishes the content of a decedent's augmented estate. Under § 30-2314, the probate estate is augmented by first reducing the estate by specified obligations and liabilities and then increasing the estate by the value of specified properties and transfers. [6] The augmented estate also includes several categories of inter vivos transfers made by the decedent. [7] The purpose of the concept of augmenting the probate estate in computing the elective share is twofold: (1) to prevent the owner of wealth from making arrangements which transmit his property to others by means other than probate deliberately to defeat the right of the surviving spouse to a share and (2) to prevent the surviving spouse from electing to a share of the probate estate when the spouse has received a fair share of the total wealth of the decedent either during the lifetime of the decedent or at death by life insurance, joint tenancy assets, and other nonprobate arrangements. [8] The combined effect of the statutory elective share and augmented estate concepts is intended to protect the surviving spouse of a decedent against donative inter vivos transfers by devices which would deprive the survivor of a fair share of the decedent's estate and at the same time prevent the surviving spouse from receiving more than such share by allowing the acceptance of certain transfers and insurance proceeds and also yet elect against the will. [9] In her first assignment of error, Margaret argues that the value of the Properties should be included in the augmented estate pursuant to § 30-2314(a)(1), which provides, in relevant part, that the augmented estate includes [t]he value of property transferred by the decedent at any time during marriage. . . for the benefit of any person other than a bona fide purchaser or the surviving spouse, but only to the extent to which the decedent did not receive adequate and full consideration in money or money's worth for such transfer, if such transfer is . . .: (i) Any transfer under which the decedent retained at death the possession or enjoyment of, or right to income from, the property. It is undisputed that the Properties were not transferred to a bona fide purchaser or surviving spouse and that they were not transferred for adequate and full consideration. And there is very little question that the record presents a genuine issue of material fact as to whether, at the time of his death, Lyle actually had possession of the Properties and disposition of their income. The dispute is over whether those facts are enough to satisfy § 30-2314(a)(1)(i). The appellees argue that the plain language of the statute limits the property included in the augmented estate to that in which the decedent retained an interest under a transfer document. In other words, the appellees argue that a transfer is the legal instrument by which the property is conveyed and that a decedent retains possession or enjoyment of, or right to income from, property under the transfer only if the legal instrument secures the decedent's right to possession, enjoyment, or income. And in this case, the warranty deed transferring the Properties from Lyle to his children did not. But absent a statutory indication to the contrary, we give words in a statute their ordinary meaning. [10] And § 30-2314(a)(1)(i) does not include the word document or even require a writing evidencing the transfer. An appellate court will not read into a statute a meaning that is not there. [11] A transfer encompasses  [a]ny mode of disposing of or parting with an asset or an interest in an asset. [12] What is significant for purposes of § 30-2314(a)(1)(i) is whether the parties to the transfer intended the decedent to functionally retain possession or enjoyment of, or the right to income from, the propertynot whether the written instrument of transfer reflects that intent. And when construing a statute, an appellate court must look to the statute's purpose and give to the statute a reasonable construction which best achieves that purpose, rather than a construction which would defeat it. [13] We look to the statutory objective to be accomplished, the evils and mischiefs sought to be remedied, and the purpose to be served. [14] The statutory comments to § 30-2314 specifically state that transfers within the meaning of subsection (a)(1) are transfers by the decedent during his lifetime which are essentially will substitutes, arrangements which give him continued benefits or controls over the property. [15] One of the purposes of the augmented estate provisions, as noted above, is to prevent the surviving spouse's right to an elective share to be defeated by a decedent's arrangements to transfer property outside probate. That purpose could hardly be well served if enforcement of the surviving spouse's rights depended upon a decedent's being foolish enough to record his or her intent in a written legal instrument. Moreover, as noted by the Legislature, the augmented estate resembles the gross estate for federal estate tax purposes. [16] The language possession or enjoyment of, or right to income from, the property is almost identical to language in the Internal Revenue Code that defines a decedent's gross estate. [17] And courts have emphasized that this language describes a broad scheme of inclusion in the gross estate, not limited by the form of the transaction, but concerned with all inter vivos transfers where outright disposition of the property is delayed until the transferor's death. [18] Therefore, to satisfy that language, [t]he donor's interest need not be reserved by the instrument of transfer, nor need it be legally enforceable. [19] It is well settled that the terms enjoy and enjoyment, as used in various estate tax statutes, are not terms of art, but connote substantial present economic benefit rather than technical vesting of title or estates. [20] And in the case of real property, the terms possession and enjoyment have been interpreted to mean the lifetime use of the property. [21] The language encompasses an interest retained pursuant to an understanding or arrangement, which need not be express, but may be implied from all the circumstances surrounding the transfer. [22] So, for purposes of determining whether a decedent retained possession or enjoyment of, or right to income from, the property, a transferor retains the enjoyment of property if there is an express or implied agreement at the time of the transfer that the transferor will retain the present economic benefits of the property, even if the retained right is not legally enforceable. [23] And a transferor retains the right of enjoyment of property if, at the time of transfer, there was an express or implied agreement that the interest or right would later be conferred. [24] For instance, in Guynn v. United States, [25] the decedent, an 81-year-old woman, conveyed a residence to her daughter, but remained in the residence without an express agreement that entitled her to do so, paid no rent to the daughter, and paid for improvements and certain expenses to the residence. The decedent's daughter testified that the decedent's remaining in the property was not discussed, because it was understood by all involved that she would stay in the property until her death. The Fourth Circuit noted that [f]rom every outward indication, [the decedent's] relationship to the property was no different after the transfer to her daughter than before. Conversely, [the daughter's] possession and economic enjoyment of the property was totally postponed until her mother's death. [26] Therefore, the Fourth Circuit held that the evidence established an implied understanding that the decedent would retain the possession or enjoyment of the property for her lifetime despite the transfer. [27] We find the foregoing reasoning persuasive, and consistent with our own reading of the identical language of § 30-2314(a)(1)(i). We conclude that under § 30-2314(a)(1)(i), a transfer under which the decedent retained at death the possession or enjoyment of, or right to income from, the property does not require that the decedent's right to possession of, enjoyment of, or income from the property be recorded in the instrument of transfer. A decedent retains possession or enjoyment of, or the right to income from, property when it is understood that the decedent will retain such an interest despite the transfer. And such an understanding need not be express; it can be implied from the circumstances surrounding the transfer. [28] Based on our review of the record, the circumstances of this case could support such an implication. It is not disputed that Lyle received income from the Properties, or that Lyle paid taxes on that income and on the Properties themselves. The evidence also establishes that Lyle used the Properties for recreational purposes, like hunting and fishing, until he was physically unable to do so, and held himself out to friends, tenants, and government agencies as the owner of the Properties. And more important, the personal representative testified that when Lyle told her about his plan to transfer the Properties, she asked about the income and the tenants and he goes well, you know, since I've always done it I would like to continue doing that. Some of the children continued paying Lyle rent to farm the Properties, and the personal representative agreed that Lyle made the final decision when it came to the Properties, up until his death. Granted, there is evidence in the record to the contraryfor instance, James averred that the children gave Lyle the Properties' income because they wanted to, not because they had to, and that Lyle had never indicated that he expected to receive that income. However, on a motion for summary judgment, the question is not how a factual issue is to be decided, but whether any real issue of material fact exists. [29] The evidence in this case, taken in the light most favorable to Margaret, could support an inference that Lyle was intended to retain possession and enjoyment of, and the right to income from, the Properties, despite their transfer to the children. Therefore, the county court erred in concluding, as a matter of law, that the Properties should not be included in the augmented estate. Upon further proceedings on remand, the court should conduct an analysis based on the principles set forth above.