Wealth Law Blog : Oregon Asset Protection Lawyers & Attorneys : Samuels Yoelin Kantor Seymour & Spinrad Law Firm : OR Estate Planning, Fiduciary Litigation

In 2007, the Oregon legislature passed a law which allowed an estate to exclude up to $7.5 million of natural resource property from Oregon Inheritance Tax. The tax policy was two-fold. First, the legislature wanted to preserve family farms, fishing and forestry operations. Second, the legislature wanted to help preserve natural resource property, such as timber, from having to be harvested prematurely, before it was ready for harvesting. 

A number of 2007 estates and early 2008 estates relied on this exclusion and filed Oregon Inheritance Tax returns owing little or no tax.  But the 2007 legislation, which was passed in the last few days of that session, had a number of unanswered questions. So, in 2008, a number of technical corrections were made, and these were applied retroactively to 2007. As a result, estates which claimed the natural resource property exclusion for decedents dying between January 1, 2007 and March 11, 2008, had additional taxes due. 

Last year some of these taxpayers asked the legislature for relief from this retroactive tax burden, but some members of the legislature turned a deaf ear. However, during the February 2010 session, the Oregon legislature granted relief to these taxpayers. They may now apply for a tax refund. 

So, what are the eligibility requirements?

• First, the estate must have eligible natural resource property. See the 2007 version of ORS 118.140.
• Second, the death must have occurred between January 1, 2007 and March 11, 2008.
• Third, less inheritance tax would be due under the 2007 version of the law.
• Fourth, eligible taxpayers must apply by December 31, 2010 or within two years of the tax payment.

If you are aware of an estate which claimed a natural resource property exclusion in 2007 or early 2008 and then subsequently had to pay Oregon Inheritance Tax as a result of the 2008 law change, they are probably eligible for a refund. The Oregon Department of Revenue is in the process of finalizing Form NRE Inheritance Tax Refund Application which taxpayers may utilize to process their refund claim. Generally, this application must be completed by December 31, 2010.

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  From time to time we will publish recent local cases or legislative bills:

In re Botimer, 166 Wash.2d 759, 214 P.3d 133 (2009).

Background:  Attorney disciplinary violations arose out of the relationship between Botimer and his clients:  a high school friend and the friend's mother. Botimer filed their tax returns, advised them regarding various family business pursuits, and negotiated a dispute over interests in one of the family businesses. The family was not advised there was a potential conflict of interest in representing multiple members of the family in these business deals, or the fact that their interests might better be represented by separate counsel.

Holding:  After discontent developed between the mother and the attorney, it all unraveled and the Washington Supreme Court upheld the six-month suspension of Botimer for three violations of the Rules of Professional Conduct.            

Instead of simply withdrawing representation, Botimer made two critical mistakes: (1) he sent a letter to the IRS detailing omissions and mis-statements Botimer believed the mother fraudulently gave to him to include on tax returns he prepared for her; and (2) Botimer assisted the high school friend's litigation counsel and provided the mother's tax returns and his substantiating documents and work product.  Not good choices. 

The Washington Supreme Court admonished Botimer for not obtaining his clients’ informed consent to represent all of them. An attorney may represent a family, but should make each member aware of the problems that could arise in the future because of the joint representation. 

Note for attorneys:  If you represent a family, you must explain the potential conflicts that may arise and obtain their informed consent to the joint representation and if things start to sour, the best choice of action is to withdraw from representation of all family members and not to reveal client confidences unless compelled to do so under a court order.

Note for those looking for attorneys:  Carefully weigh the cost savings of only one attorney against the possible problems joint representation may cause. 

For more on this case, see The Ethical Quandry.

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Francine Russo wrote a recent Times article called "Who Takes Care of Mom?," addressing the challenges of sibling dynamics when providing care for aging parents.  She wrote a personal account of making the wrong choices in allowing her sister to take on the burden of caring for their aging parents. 

Russo writes that an estimated 43.5 million adults in the U.S. are caring for an older relative or friend, and 43% of those people said they felt as though they had no choice.  Such frustration not only leads to discontent within the family, but also can lead to a sense of entitlement that perhaps mom or dad's money should be given to the caretaking child - and sooner rather than later.  As a fiduciary litigator, I see too often that frustration and burn out manifests itself as financial elder abuse.

So when deciding "Who Takes Care of Mom?" you should also decide who is taking care of mom's money.  Ignoring either leads to trouble.     

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