Filed: July 2, 2009
Author: Judge Timothy E. Meredith
Held: Gifts to nephews and great-nephews and great-nieces made by 87 year old man who died within two years after gifts were made are subject to Maryland inheritance tax.
Facts: Decedent died on November 23, 2003, at the age of 88. He had made gifts of partnership interests to his nephews on August 1, 2002. Those interests had a total value of $861,668. He made gifts totaling $385,000 via transfers on January 15, 2003, to "Section 529 Plans" of $55,000 for each of his seven great-nephews and great-nieces. Both the Maryland Tax Court and the Circuit Court for Montgomery County had previously upheld the assessment of inheritance taxes with respect to the transfers.
First, the Court concluded that the gifts, either considered individually or in the aggregate, constituted a material part of the property of the decedent.
Second, the Court rejected the argument that gifts were not made in contemplation of death because the decedent was healthy and vigorous when he made the gifts. The Court found that, based upon the decedent's medical records that had been introduced into evidence, the decedent was in declining health. The decedent suffered from, inter alia, coronary artery disease, congestive heart failure, prostate cancer, and progressive dementia.
The full opinion is available in PDF.