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In re O’Connor’s Estate

    Brief Fact Summary. The estate of Decedent John O’Connor escheated (or reverted) to the State of Nebraska for want of heirs. The county of Adams is contending that the State is liable to pay an inheritance tax.

    Synopsis of Rule of Law. Escheat of lands for want of heirs is not subject to the rules of inheritance, and the State is therefore not liable to pay any inheritance tax.

    Facts. Decedent John O’Connor died owning land, but without any heirs. The lands, situated in Adams County, then escheated to the State of Nebraska by operation of law. The county then sought to have the State pay inheritance tax on the escheated property as a beneficiary. The county was successful in the trial court and the State appealed.

    Issue. When the State gains title to lands by escheat is the State a beneficiary under the rules of inheritance such that the State is liable to pay taxes on the inheritance?

    Held. No. Judgment reversed and dismissed.
    Escheat historically means “the lapsing or reverting to the crown or the state as the original and ultimate proprietor of real estate, by reason of a failure of persons legally entitled to hold the same.” In other words, when a person dies owning real estate and no heir can be found, then the property reverts to the state.
    The Court cites a statute in effect since 1875 which states that, “Upon the failure of heirs the title shall vest at once in the state, without an inquest or other proceedings in the nature of office found.” This is the statutory recognition of the state’s right of escheat.
    The Court found that the statutes regarding the tax of inheritance were based on the right of succession to property by inheritance, will, or transfer made in contemplation of death, and that all of those circumstances of succession are distinguishable from that of escheat.
    The Court found that the state was not a beneficiary within the meaning of the inheritance tax statutes and that in cases of escheat, the state is not required to pay any taxes for the acquisition of title.

    Discussion. This case provides a capsule summary of the concept of escheat, which is rarely invoked, but is nevertheless a part of the


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