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In the Matter of John D. Delaney
State: Indiana
Court: Court of Appeals
Docket No: 49A05-0501-CV-48
Case Date: 12/13/2005
Preview:FOR PUBLICATION

ATTORNEY FOR APPELLANT: WILLIAM R. FATOUT Stewart & Irwin, P.C. Indianapolis, Indiana

ATTORNEYS FOR APPELLEE: JOHN A. CREMER SUZANNE E. KATT Cremer, Burroughs & Cremer MICHAEL R. FISHER Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA
DOUGLAS R. BROWN as TRUSTEE of the THIRD AMENDED TRUST of JOHN D. DELANEY, Appellant-Trustee, vs. GERALDINE M. DELANEY, Appellee-Claimant. ) ) ) ) ) ) ) ) ) ) )

No. 49A05-0501-CV-48

APPEAL FROM THE MARION SUPERIOR COURT The Honorable Charles J. Deiter, Judge Cause No. 49D08-0308-TR-1990

December 13, 2005 OPINION - FOR PUBLICATION

RILEY, Judge

STATEMENT OF THE CASE Appellant-Trustee, Douglas R. Brown (the Trustee), appeals the trial court's Order granting Appellee-Claimant's, Geraldine M. Delaney (Geraldine), claim for

reimbursement of tax liabilities against the Third Amended Trust of John D. Delaney (Trust). We reverse. ISSUES The Trustee raises two issues on appeal, one of which we find dispositive and which we restate as follows: Whether the probate court erred in denying Trustee's Motion to Dismiss for Failure to State a Claim. FACTS AND PROCEDURAL HISTORY John D. Delaney (John) and Geraldine were married on June 18, 1990. During the 1998 tax year, they filed a joint federal income tax return. Because the tax liability was never paid, on February 15, 2001, the Internal Revenue Service issued a tax lien on the real estate jointly owned by John and Geraldine. On July 25, 2001, John died. John's probate estate was opened that same day. However, the assets in the probate estate were minimal due to John's inter vivos transfer of substantially all of his estate to a revocable living trust. In October of 2001, nearly three months after John's death, Geraldine learned that a tax lien had been recorded on the marital residence which she had come to own by right of survivorship. On August 21, 2002, and September 11, 2002, Geraldine paid the tax debt in the total amount of $76,726.15.

2

A year later, on August 21, 2003, Geraldine filed her Petition to Docket Trust and Administrative Claim for Reimbursement for Payment of Debt of Decedent. On August 22, 2003, the probate court ordered the Trust to be docketed. On September 5, 2003, the Trustee filed his Motion to Dismiss for Failure to State a Claim. On January 7, 2004, after response by Geraldine, the probate court denied the Trustee's motion. Thereafter, on March 15, 2004, the probate court heard Geraldine's claim for reimbursement. On August 2, 2004, the probate court entered judgment in favor of Geraldine and against the Trust, ordering that the Trust makes contribution to Geraldine on the joint debt in the amount of one-half of the taxes, penalty and interest. The probate court stated, in pertinent part, as follows: ... 3. Since [John] was both settler and a beneficiary, trust provisions restraining transfer of his beneficial interest will not prevent his creditors from satisfying claims from his interest in the trust estate. I.C. [
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