Probate & Trust Law Section Conference Manual ... - Minnesota CLE

that exemptions or deductions allowed by reason of the relationship of a
person to the decedent (e.g. the marital deduction) inure to the benefit of
the person bearing such relationship. Minn. Stat. § 524.3-916(e)(2);
Estate of Shapiro, 380 N.W.2d 796, 799 (Minn. 1986); Estate of Shannon,
T.C. Memo 1990-614, 60 T.C.M. 1361 (applying Minnesota law). Under
Minnesota law, “there is a strong policy in favor of the equitable
allocation of the tax burden provided in the statute prescribing
apportionment, and . . . a direction to the contrary in a will or other
governing instrument must be expressed in terms that are specific, clear,
and not susceptible of reasonably contrary interpretation.” Estate of
Kapala, 402 N.W.2d 150, 153 (Minn. Ct. App. 1987); Estate of Shannon,
T.C. Memo 1990-614 (quoting Kapala).
2. Conflict in Documents. Minnesota Favors Equitable Apportionment.
Courts have dealt with conflicting provisions in governing documents
(e.g., conflicting provisions in a pour-over will and revocable trust) in
various ways. The only Minnesota case on the issue is an unpublished
decision in which it was held that where two governing documents
conflict, the default (equitable apportionment) statute applies. Trust
Agreement of Robert G. Sudheimer, (Minn. Ct. App. Jan. 9, 2007)
(unpublished).
a. Cases Holding Will Controls. In the following cases, it was held
that a direction in a will to pay estate taxes from the probate estate
trumped a provision in a revocable trust allowing payment of estate
taxes from the trust: Estate of Harry Fagan, Jr. v. Commissioner,
TCM 1999-46, 77 TCM 1427 (CCH); Estate of Miller v.
Commissioner, TCM 1998-416, 76 TCM 892 (CCH), aff’d per
curiam, 209 F.3d 720 (5 th Cir. 2000); Estate of Lewis v.
Commissioner, TCM 1995-168, 69 TCM 2396 (CCH). These
cases have limited applicability in Minnesota, because they
involved apportionment statutes that provided they could only be
altered by a “will.”
b. Cases Holding Revocable Trust Controls. In the following cases, it
was held that the provisions of the revocable trust controlled:
Estate of Pickrell, 806 P.2d 1007 (Kan. 1991) (holding that the
trust controlled because it was signed later); Estate of Meyer, 702
N.E.2d 1078 (Ind. App. 1998) (holding that the trust controlled
because it was the “primary” document); Patterson v. U.S., 181
F.3d 927, 929 (8 th Cir. 1999) (holding that where the trustee had
the discretion to pay the tax from the trust and did so, the tax
consequences would follow payment on that basis). These cases
are more relevant in Minnesota, subject to Minnesota’s common
law preference for equitable apportionment (i.e., a Minnesota court
is likely to resolve a conflict in favor of equitable apportionment,
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