More Humor at the Tax Court (riffing on Jane Austen)

[jcolvin2]

From Estate of Hurford v. Commissioner, T.C. Memo. 2008-278

HOLMES, Judge: It is a truth universally acknowledged, that a recently
widowed woman in possession of a good fortune must be in want of an estate planner.

Thelma Hurford had devoted her life to family and friends,
leaving the management of the finances to her husband Gary. When
he died suddenly, she had to learn what they owned and decide
what to do with it. While she struggled with this burden, she
was herself stricken with cancer and so had to arrange the
accelerated planning of her own estate. Two attorneys vied for
her attention and she chose Joe B. Garza.

She lost her life to the cancer. We must now decide how
much of her estate will be lost to taxes.



Gary T. Hurford was born in West Texas in unpromising
circumstances and went at a young age to work on oil rigs. There
he met a petroleum engineer whose clean clothes and new car
suggested to young Gary that education might lead to a better
life. He soon gave up roughnecking and enrolled at the
University of Texas. He discovered there that he had an aptitude
for engineering, and after graduation he was hired by the Hunt
Oil Company. He rose steadily and after 25 years became the
company’s first president not named Hunt. He prospered and grew
rich.

Thelma also came from a modest background, the daughter of
immigrants. She was an elementary school teacher when she met
Gary and they soon wed. In due course, she became a mother and
devoted herself to working inside the home.

Much of this work lay in rearing three children; all of whom
are now married with children of their own. The oldest is Gary
Michael Hurford, known as Michael. Michael grew up in Texas,
went to the University of Texas at Austin, and then to medical
school in San Antonio. He became a psychiatrist and practices in
Kentucky, where he also was a resident when the petition was
filed.

David T. Hurford is the middle child. David graduated from
Southwest Texas State University, but has struggled with
difficult personal problems, some of them severe, for much of his
life. His parents and his siblings acknowledged this and have
tried to protect him, particularly in his finances. While his
parents were alive, David stayed close by and worked for many
years on one of his dad’s ranches--raising and selling cattle,
fixing fences, and cutting and baling hay.

The youngest Hurford is Michelle Hurford McCandless.
Michelle also graduated from the University of Texas at Austin,
and she worked in advertising until October of 1997, when Gary
hired her to help with the family’s bookkeeping--especially the
preparation of the payroll for the employees whom Gary hired to
work on the farms and ranches that he had bought over the years.
Michelle also kept the books for all her parents’ investments and
bank accounts.

Michelle, out of duty and habit, took notes on nearly every
meeting she attended and every phone call she listened to that
involved Gary’s and Thelma’s estates. She would also
meticulously list the questions that she planned to ask during
those meetings and calls. It appears that she learned these
habits from her mother, who also kept in her own planner detailed
notes of seemingly every meeting she had. Michelle saved all
these notes and turned them over to the Commissioner during
discovery. We view Michelle’s action as a strong indicator of
her honesty and have used these notes extensively to reconstruct
what happened after Gary died.

But we use them with some caution. They show a general lack
of understanding--even some confusion--about the tax and estate planning
concepts at issue in this case. This is entirely
understandable, since neither Michelle nor her mother had an
education in law or accounting. But the confusion of Michelle
and her siblings about these concepts, though it may have been
rooted in their inherent difficulty, was surely compounded by the
barrage of professional advice they both sought and had directed
against them.