Estate of Shafer v. Commissioner

United States Tax Court · 1983 · Evidence

EvidenceFed. R. Evid. 801(d)(2)Rule 143(b)hearsayadmissionsexecutorrepresentative capacityimpeachment

Facts

In 1939, independent sellers conveyed lot No. 436 by deed granting life interests to decedent and his wife and remainder interests to their two sons; the deed recited consideration paid by the four grantees as a group. During the audit of the wife's estate, both sons signed affidavits stating that decedent bought the property and was the sole purchaser, and later one son wrote the Commissioner that he did not deny decedent made a gift of the remainder interests to the sons at the time of purchase. At trial, the estate argued the deed conclusively showed all four paid consideration, but the Tax Court found the sons' evidence of their own payment scant and ambiguous. The court found that decedent furnished the entire consideration for the 1939 purchase and retained a life interest in the property conveyed.

Issue

Whether affidavits and a letter signed by the sons-executors were admissible as admissions and for impeachment, notwithstanding hearsay and Rule 143(b) objections, and whether decedent's furnishing the entire purchase price for property deeded to himself and his wife for life with remainder to his sons constituted a section 2036 transfer with a retained life interest.

Rule

A statement by an executor offered against the estate is admissible as a party-opponent admission under Fed. R. Evid. 801(d)(2) if relevant to representative affairs, even if not made in a representative capacity, and such admissions are not excluded by Tax Court Rule 143(b) merely because they are in affidavits or a letter. For section 2036 purposes, a decedent who furnishes the consideration for property and causes title to be conveyed so that he retains a life interest while others take the remainder is treated, in substance, as having made a transfer with a retained life interest, even if legal title was never first placed in the decedent.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Tax Court litigation over a federal estate tax deficiency, the estate of Nora Benton is represented by her son, Eli Benton, as executor in Columbus, Ohio. Two years before his appointment, Eli signed a personal letter to a revenue agent stating that Nora alone had supplied the funds for a cabin later deeded to Nora for life with remainder to Eli and his sister.

If the Commissioner offers Eli’s letter against Nora’s estate for the truth of its contents, the strongest argument for admissibility is that the letter is:

Explanation. The majority read Rule 801(d)(2) broadly. A statement by an executor may be used against the estate when offered against him in his representative capacity, without requiring that the statement itself have been made in that capacity, so long as it is relevant to representative affairs. That is the governing rationale here. (Derived from Estate of Shafer v. Commissioner (n.d.).)