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Pribula v. County of
Marshall 1996 WL 685574 Minn.Tax,1996. Nov. 26, 1996 Only the Westlaw citation is
currently available. John
A. Hatling, Attorney at Law, represented the Petitioners. Michael
D. Williams, Marshall County Attorney, appeared for the Respondent. FINDINGS
OF FACT, CONCLUSIONS OF LAW AND ORDER FOR JUDGMENT DOAR,
Chief Judge. [*1]
The issue in this case is whether the subject property is entitled to homestead
classification for the January 2, 1995 assessment date. Briefs
were filed by both parties and the matter was submitted to the Court for
decision on September 3, 1996. The
Court, having heard and considered the evidence adduced at the hearing, and
upon all of the files, records and proceedings herein, now makes the following: FINDINGS
OF FACT 1.
Petitioners have sufficient interest in the property to maintain this petition;
all statutory and jurisdictional requirements have been complied with, and the
Court has jurisdiction over the subject matter of the action and the parties
hereto. 2.
The subject property, located in Alvarado, Minnesota, has been used as a
homestead by Leon and Irene Pribula, who are Minnesota residents, for fifty-two
years. 3.
Prior to April 8, 1991, the subject property was owned by Leon and Irene Pribula. 4.
On April 8, 1991, the subject property was conveyed to Leon and Irene Pribula
as trustees of the Pribula Family Living Trust (the “Living
Trust”). The Living Trust was a revocable trust. 5.
On September 15, 1994, Leon and Irene Pribula amended the Living Trust by
adding Article Thirteen entitled “Asset Protection
Trust/Sub-trust.” The sub-trust, the Leon J. Pribula & Irene M.
Pribula Irrevocable Asset Protection Trust, is a “medicaid qualifying
provision” (the “Sub-Trust”). 6.
Paragraph three of the Sub-Trust provides that Leon and Irene Pribula
“abrogate and abolish forever any personal rights to reclaim, appoint
or use any corpus/principal (and income if so established—infra) of
such Sub-trust, or that may be transferred to such Sub-trust, to or for their
benefit, their estate, their creditors or their creditors’
estate.” 7.
On September 15, 1994 Leon and Irene Pribula, as trustees of the Living Trust,
conveyed the subject property to their son, Gregory F. Pribula, as trustee of
the Sub-Trust. 8.
The Waseca County Assessor reviewed the Living Trust and the Sub-Trust and
determined that the subject property was not entitled to homestead
classification for the January 2, 1995 assessment date. Leon and Irene Pribula
filed this appeal. 9.
Leon and Irene Pribula were not owners of the subject property on the January
2, 1995 assessment date. CONCLUSIONS
OF LAW 1.
The subject property was not owned by Leon and Irene Pribula on the January 2,
1995 assessment date. 2.
Gregory F. Pribula, as trustee of the Sub-Trust, is not a relative within the
meaning of Minn.Stat. § 273.124, subd. 1(c). 3.
The assessor’s classification of the subject property as of January 2,
1995 is hereby affirmed. LET
JUDGMENT BE ENTERED ACCORDINGLY. THIS IS A FINAL ORDER. A STAY OF 15 DAYS IS
HEREBY ORDERED. MEMORANDUM Leon
and Irene Pribula seek January 2, 1995, homestead classification for property
used as their residence in Alvarado, Minnesota. Minn.Stat. § 273.124,
subd. 1 reads in relevant part as follows: [*2]
General rule. (a) Residential real estate that is occupied and used for the
purposes of a homestead by its owner, who must be a Minnesota resident, is a
residential homestead. Minn.Stat.
§ 273.124, subd. 1 (“the Homestead Provision”). The
parties agree that Leon and Irene Pribula used and occupied the property as
their home on the assessment date. Therefore the issue is ownership. “The
rules for granting homestead classification to trust property are well defined.
In order to qualify for the homestead classification the beneficiary must have
an unqualified legal right under the terms of the trust to possession of the
property as a homestead.” Norwest Bank Minnesota v. County of
Hennepin, File No. TC-12359, slip op. at 8 (Minn. Tax Ct. June 9, 1992). The
record owner of the subject property on the assessment date was Gregory F.
Pribula, trustee of the Sub-Trust. Paragraph three of the Sub-Trust provides
that Leon and Irene Pribula have no right to use the principal or any income of
the assets of the Sub-Trust. Therefore, the Pribulas are not the beneficiaries
of the assets of the Sub-Trust and have no right under the terms of the
Sub-Trust to possession of the subject property. [FN1] FN1.
The Pribulas are beneficiaries of the Living Trust. Petitioners
argue that retained “incidents of ownership,” such as the
power to change beneficiaries and a special power of appointment, make them
owners of the Sub-Trust assets. See Internal Revenue Code § 674. We
disagree and find that a retained incident of ownership sufficient to tax the
income of a trust to its grantor does not qualify as ownership within the
meaning of the Homestead Provision. Therefore, despite the fact that Leon and
Irene Pribula were in actual possession of the subject property on the
assessment date, they were not owners within the meaning of the Homestead
Provision. Finally,
Petitioners argue that if they are not owners of the subject property within
the meaning of the Homestead Provision, they are entitled to homestead
classification pursuant to Minn.Stat. § 273.124, subd. 1(c) which
reads in relevant part as follows: Residential
real estate that is occupied and used for purposes of a homestead by a relative
of the owner is a homestead but only to the extent of the homestead treatment
that would be provided if the related owner occupied the property. For purposes
of this paragraph …, “relative” means a parent,
stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle,
or aunt. (the
“Relative Homestead Provision”). The Relative Homestead
Provision clearly defines “relative” in human terms. We find
that Gregory Pribula, record owner of the subject property in his capacity as
trustee of the Sub- Trust, is not a “relative” within the
meaning of the Relative Homestead Provision. We therefore affirm the
assessor’s classification. |