A Florida law cured a defective deed that transferred property that was later subject to a federal estate tax lien. Seven years before his death, a decedent transferred by deed real property to an irrevocable trust created for the benefit of his son. However, the deed was not witnessed by two individuals as required by Florida law. After the decedent’s death, the son became the trustee of the trust and filed an estate tax return, which included the real property in the decedent’s gross estate. Because the estate tax liability was unpaid, the government filed tax liens against the estate and the real property and eventually seized the real estate.
Technical Defect Cured
The applicable Florida statute provided that technical defects were cured five years after the instrument conveying property was recorded. The parties agreed that the statute was intended to cure the defect at issue, that is a missing witness, but disagreed as to how the statute cured defective deeds. Applying the Florida court’s interpretation of the statute, the trustee was not required to get a court order enforcing the statute’s curative provision. The deed was considered to be a valid transfer by operation of law five years after it was recorded.
Summerlin Principle Not Applicable
The Summerlin principle, as called by the parties after Summerlin, 310 U.S. 414 (1940), which holds that the United States is not bound by statute of limitations that would have barred the enforcement of the statute’s curative provision, was not applicable. The deed was cured by operation of law, which removed the property from the decedent’s gross estate before the government’s claim could have vested.
M.A. Saccullo, CA-11
Code Sec. 6324
CCH Reference – FINH ¶21,065.40
Tax Research Consultant
CCH Reference – TRC ESTGIFT: 51,202.10