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07/23/2019 08:06 AM CDT




                                                        - 390 -
                                Nebraska Court of A ppeals A dvance Sheets
                                     27 Nebraska A ppellate R eports
                                             IN RE ESTATE OF SEDLACEK
                                                Cite as 27 Neb. App. 390




                                        In
                                        Estate of Leonard John
                                             re
                                       Sedlacek, deceased.
                       James Psota, Personal R epresentative of the Estate
                         of Leonard John Sedlacek, deceased, appellee,
                             v. Valley County, Nebraska, appellant.
                                                   ___ N.W.2d ___

                                         Filed July 16, 2019.     No. A-18-836.

                 1. Decedents’ Estates: Taxation: Appeal and Error. On appeal of an
                    inheritance tax determination, an appellate court reviews the case for
                    error appearing on the record.
                 2. Judgments: Appeal and Error. When reviewing a judgment for errors
                    appearing on the record, the inquiry is whether the decision conforms
                    to the law, is supported by competent evidence, and is neither arbitrary,
                    capricious, nor unreasonable.
                 3. Decedents’ Estates: Parent and Child: Taxation: Appeal and Error.
                    Factual findings necessary in determining whether the requisite acknowl-
                    edged parent-child relationship of Neb. Rev. Stat. § 77-2004 (Reissue
                    2018) exists should be reviewed for sufficient evidence and should not
                    be disturbed on appeal unless clearly wrong.
                 4. Decedents’ Estates: Taxation: Statutes: Proof. Statutes exempting
                    property from inheritance tax should be strictly construed, and the bur-
                    den is on the taxpayer to show that he or she clearly falls within the
                    language of the statute.
                 5. Decedents’ Estates: Parent and Child: Taxation. The following fac-
                    tors serve as appropriate guideposts to the trial court in making a deter-
                    mination of an acknowledged relationship of a parent under Neb. Rev.
                    Stat. § 77-2004 (Reissue 2018): (1) reception of the child into the home
                    and treatment of the child as a member of the family, (2) assumption
                    of the responsibility for support beyond occasional gifts and financial
                    aid, (3) exercise of parental authority and discipline, (4) relationship
                    by blood or marriage, (5) advice and guidance to the child, (6) shar-
                    ing of time and affection, and (7) existence of written documentation
                                    - 391 -
            Nebraska Court of A ppeals A dvance Sheets
                 27 Nebraska A ppellate R eports
                        IN RE ESTATE OF SEDLACEK
                           Cite as 27 Neb. App. 390

    evincing the decedent’s intent to act as a parent. This list of guideposts
    is not exhaustive, nor will every factor necessarily be present in each
    case. A trial court should consider all pertinent factors in arriving at
    that determination.
 6. ____: ____: ____. The law recognizes that although a natural parent-
    child relationship may exist elsewhere, if the parties regard each other
    in all of the usual incidents and relationships of family life as parent and
    child, the benefits of the inheritance tax statute flow.

  Appeal from the County Court for Valley County: Tami K.
Schendt, Judge. Affirmed.
   Brandon B. Hanson for appellant.
   Amanda L. Tobey, of Peterson Legal Services, P.C., L.L.O.,
for appellee.
   Pirtle and Bishop, Judges.
   Pirtle, Judge.
                       INTRODUCTION
   Valley County (County) appeals from an order entered in
the county court for Valley County finding that Leonard John
Sedlacek stood in place of a parent for James Psota and that
thus, Psota was entitled to a “Class 1” inheritance tax rate for
property inherited from Sedlacek’s estate. The County argues
that there was not sufficient evidence of a parent-child relation-
ship between Psota and Sedlacek and that therefore, the county
court erred in granting Psota a Class 1 inheritance tax rate. For
the reasons that follow, we affirm.
                       BACKGROUND
   Sedlacek was a longtime farmer in Valley County, Nebraska.
Psota met him when he was around 10 years old and Sedlacek
would come to help on the family farm. Psota’s mother died
in approximately 1991, and it was at this time that he and
Sedlacek formed a closer relationship, with Psota stating it was
like he had two fathers. Sedlacek was divorced and had several
children who were distant and rarely in contact with him.
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         Nebraska Court of A ppeals A dvance Sheets
              27 Nebraska A ppellate R eports
                   IN RE ESTATE OF SEDLACEK
                      Cite as 27 Neb. App. 390

    During the years that followed, Sedlacek would attend holi-
day parties, birthdays, and church programs—even attending
Psota’s wedding. He would regularly be invited to the Psota
home for dinner with Psota’s family. Psota and his family
would likewise spend time with Sedlacek at his home for
meals. Psota and Sedlacek also worked closely with each other
as they were both farmers, with Psota seeking advice from
Sedlacek and each helping the other when needed.
    As Sedlacek got older and needed additional support, Psota
provided both financial and emotional support. He assisted in
paying for Sedlacek’s utilities, telephone, and other bills, as
well as assisting him in paying off loans to prevent him from
losing his farm. Psota also rode with Sedlacek in an ambu-
lance for needed surgery when Sedlacek initially refused to
go. Sedlacek was eventually required to enter a nursing home
due to his failing health, and Psota acted as a “co-power of
attorney.” Psota was the primary contact for the nursing home
if it had any issues with Sedlacek, and Psota would assist them
regularly. As Sedlacek’s health further declined, Psota con-
tacted Sedlacek’s stepchildren to let them know about his con-
dition—all of whom declined to visit him in his final weeks.
Sedlacek passed away in August 2017, and Psota handled the
funeral arrangements. In his will, Sedlacek specifically noted
that he did not wish his “children and other relatives” to share
in his estate and left the entirety of his estate to Psota.
    On July 24, 2018, Psota filed a petition for determination of
inheritance tax. Psota asked the court to consider him a child
of Sedlacek, because Sedlacek had stood in the acknowledged
relation of a parent pursuant to Neb. Rev. Stat. § 77-2004
(Reissue 2018). A hearing was held on July 25, with five
witnesses testifying. The court entered an order on July 31,
determining that Sedlacek had stood in the acknowledged
role of a parent pursuant to § 77-2004 and granted the peti-
tion for determination of inheritance tax with Psota receiving
a Class 1 inheritance tax rate. It is from this order that the
County appeals.
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         Nebraska Court of A ppeals A dvance Sheets
              27 Nebraska A ppellate R eports
                   IN RE ESTATE OF SEDLACEK
                      Cite as 27 Neb. App. 390

                  ASSIGNMENTS OF ERROR
   On appeal, the County assigns that the county court erred
in determining that Psota was entitled to a Class 1 inheritance
tax rate as dictated by § 77-2004 and in determining there was
sufficient evidence that Sedlacek stood in place of a parent
for Psota.
                   STANDARD OF REVIEW
   [1,2] On appeal of an inheritance tax determination, an
appellate court reviews the case for error appearing on the
record. In re Estate of Hasterlik, 299 Neb. 630, 909 N.W.2d
641 (2018). When reviewing a judgment for errors appearing
on the record, the inquiry is whether the decision conforms to
the law, is supported by competent evidence, and is neither
arbitrary, capricious, nor unreasonable. Id.
   [3] Factual findings necessary in determining whether the
requisite acknowledged parent-child relationship of § 77-2004
exists should be reviewed for sufficient evidence and should
not be disturbed on appeal unless clearly wrong. In re Estate of
Hasterlik, supra.
                          ANALYSIS
   [4] The County argues that there was not sufficient evidence
to find that Sedlacek stood in place of a parent for Psota.
Statutes exempting property from inheritance tax should be
strictly construed, and the burden is on the taxpayer to show
that he or she clearly falls within the language of the stat-
ute. In re Estate of Breslow, 266 Neb. 953, 670 N.W.2d 797
(2003). Section 77-2004 provides that “any person to whom
the deceased for not less than ten years prior to death stood
in the acknowledged relation of a parent” shall receive an
inheritance tax exemption of $40,000 and shall be taxed at
the rate of 1 percent of the clear market value of the prop-
erty thereafter.
   [5] The Nebraska Supreme Court has identified the fol-
lowing factors as appropriate guideposts to the trial court in
making a determination of an acknowledged relationship of
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          Nebraska Court of A ppeals A dvance Sheets
               27 Nebraska A ppellate R eports
                    IN RE ESTATE OF SEDLACEK
                       Cite as 27 Neb. App. 390

a parent under § 77-2004: (1) reception of the child into the
home and treatment of the child as a member of the family, (2)
assumption of the responsibility for support beyond occasional
gifts and financial aid, (3) exercise of parental authority and
discipline, (4) relationship by blood or marriage, (5) advice
and guidance to the child, (6) sharing of time and affection,
and (7) existence of written documentation evincing the dece-
dent’s intent to act as a parent. In re Estate of Kite, 260 Neb.
135, 615 N.W.2d 481 (2000). However, this list is not exhaus-
tive, nor will every factor necessarily be present in each case.
In re Estate of Ackerman, 250 Neb. 665, 550 N.W.2d 678
(1996). A trial court should consider all pertinent factors in
arriving at that determination. Id. The county court specifi-
cally identified two additional factors as being important in its
consideration: the “‘community perception’” factor and the
support provided by Psota to Sedlacek.
   [6] The County’s primary argument is that, even if there
were a parent-child relationship, such a relationship did not
exist for 10 or more years as Psota’s biological father passed
away in 2013. However, “‘The law recognizes that although
a natural parent-child relationship may exist elsewhere, if
the parties regard each other in all of the usual incidents and
relationships of family life as parent and child, the benefits’
of the inheritance tax statute flow.” In re Estate of Ackerman,
250 Neb. at 672, 550 N.W.2d at 683, citing Estate of Larson,
106 Cal. App. 3d 560, 166 Cal. Rptr. 868 (1980). See, also, In
re Estate of Kite, supra. As such, so long as the relationship
between Psota and Sedlacek was of a parent-child nature prior
to the death of Psota’s biological father, it will be included for
the purposes of establishing the required 10 years.
   The County next argues that there was not sufficient evi-
dence to find that there was a parent-child relationship between
Psota and Sedlacek. It concedes that the fifth factor set forth in
In re Estate of Ackerman, providing advice and guidance, and
the sixth factor, sharing of time and affection, were present in
this case and that the evidence showed that Psota and Sedlacek
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          Nebraska Court of A ppeals A dvance Sheets
               27 Nebraska A ppellate R eports
                    IN RE ESTATE OF SEDLACEK
                       Cite as 27 Neb. App. 390

had a close relationship. Psota concedes that the fourth factor,
that the decedent and devisee are related by blood, and the sev-
enth factor, written documentation of decedent’s intent to act
as a parent, were not present in this case. As such, our analysis
focuses on the other three factors, as well as the additional fac-
tors considered by the county court.
   The first factor listed in In re Estate of Ackerman, recep-
tion of the child into the home and treatment of the child as
a member of the family, is claimed by both parties. Initially,
residency in the home of the decedent was required by the
statute to demonstrate a relationship. In re Estate of Ackerman,
supra. However, this requirement was removed and this fac-
tor is resolved based on whether the individuals treated each
other as family such as spending holidays together and sharing
meals together. See In re Estate of Kite, supra. The County
argues that because Psota never resided for even a temporary
amount of time with Sedlacek, this factor weighed in favor
of no relationship existing. While it is true that Psota did not
reside in Sedlacek’s home at any point, the testimony showed
that Sedlacek had invited Psota and Psota’s family into his
home on many occasions for various meals, visits, and holidays
and that Sedlacek regularly visited the Psota home for meals
and holiday visits over a period of more than 10 years prior to
his death.
   The second factor listed in In re Estate of Ackerman,
assumption of the responsibility of support beyond occa-
sional gifts and financial aid, is also claimed by each party.
We note that this does not mean that the parent must accept
a legal obligation for support, because this would rarely exist
where the child was an adult. See In re Estate of Ackerman,
250 Neb. 665, 550 N.W.2d 678 (1996). However, courts have
considered whether the parent provided support in other ways
such as providing room and board or paying for classes. Id.
It is undisputed that Psota never accepted financial aid from
Sedlacek, although he testified that Sedlacek had offered it
to him.
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          Nebraska Court of A ppeals A dvance Sheets
               27 Nebraska A ppellate R eports
                    IN RE ESTATE OF SEDLACEK
                       Cite as 27 Neb. App. 390

   The third factor listed in In re Estate of Ackerman, exercise
of parental authority and discipline, has been similarly ques-
tioned when applying it to an adult. It has been recognized that
after a child has established his or her independence, it is not
unusual that the level of discipline is slight. Id. The County
argues that the way Sedlacek treated Psota did not rise to the
level of discipline for the purpose of this factor. Both Psota
and the County agree that the testimony showed that Sedlacek
would criticize Psota and would tell him to quit doing some-
thing if he “step[ped] out of line.” Further, Psota testified that
Sedlacek had disciplined Psota’s children.
   The final two additional factors identified by the county
court, “community perception” and the support provided by
Psota to Sedlacek, did have specific findings made by the
court. The court found that testimony from individuals in the
community familiar with Psota and Sedlacek was weighed
in favor of treating the relationship between them as familial
because the members of the community perceived them as
being father and child. A witness who knew Sedlacek for over
10 years testified that he initially thought Psota and Sedlacek
were father and son and that they presented themselves as such
to the community. Another witness similarly testified that hav-
ing known them both for over 13 years, she regarded Sedlacek
as a father figure to Psota. She also testified that Sedlacek’s
relationship with Psota’s children was one of a grandfather
with grandchildren. A witness who worked at the nursing home
Sedlacek was placed at testified that she had known Psota and
Sedlacek for a year and that she believed they were father
and son until she was told otherwise just a few months before
Sedlacek passed away. Lastly, another witness also testified
that she had known the two for over 15 years and that they
had a father-son relationship. Of particular note, she testified
that Sedlacek referred to Psota and Psota’s family when asked
about his family.
   The second factor the county court identified was the sup-
port provided by Psota to Sedlacek. The court specifically
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          Nebraska Court of A ppeals A dvance Sheets
               27 Nebraska A ppellate R eports
                    IN RE ESTATE OF SEDLACEK
                       Cite as 27 Neb. App. 390

noted that the fact Psota cared for Sedlacek, supported him
financially and emotionally, and provided considerable care for
him during the end of his life weighed in favor of treating the
relationship as that of a parent and child. Psota testified that he
helped Sedlacek pay his utilities, telephone, and other bills, as
well as assisting him in paying off loans to prevent him from
losing his farm. This financial assistance was also testified to
by one of the witnesses. As Sedlacek aged, Psota assisted him
on his farm, rode with him to his medical appointments, and
regularly visited him every other day when he was in the nurs-
ing home.
   While it is clear that some of the factors are either less
relevant in this case or not present, the remaining factors and
the evidence supporting them are sufficient to find that there
was a parent-child relationship between Psota and Sedlacek.
Certainly, we cannot say that the county court’s conclusion was
clearly wrong in light of the substantial evidence that Sedlacek
viewed Psota as his family, as did the rest of the community,
and that both Psota and Sedlacek treated each other as such,
providing emotional and financial support for one another for a
period of more than 10 years prior to the passing of Sedlacek.
Therefore, the order of the county court is supported by suf-
ficient evidence.
                        CONCLUSION
   In conclusion, we find that there was sufficient evidence to
support the county court’s determination that a parent-child
relationship existed for the purposes of § 77-2004 and that
Psota should be entitled to a Class 1 inheritance tax rate. The
order of the county court is affirmed.
                                                    A ffirmed.
   Moore, Chief Judge, participating on briefs.
