Barbara J. DeLuca, Trustee Hawthorne Street 30 Realty Nominee Trust v. Board of Assessors of the City of Newton (September 9, 2015)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD

BARBARA J. DeLUCA, TRUSTEE      v.     BOARD OF ASSESSORS OF THE HAWTHORNE STREET 30 			     CITY OF NEWTON
REALTY NOMINEE TRUST
			 	
Docket No. F322117					Promulgated: 						 					September 9, 2015

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65 from the refusal of the Board of Assessors of the City of Newton ("assessors" or "appellee"), to abate taxes on certain real estate located in the City of Newton owned by and assessed to the Hawthorne Street 30 Realty Nominee Trust, Barbara DeLuca, Trustee ("appellant") under G.L. c. 59, §§ 11 and 38 for fiscal year 2014 ("fiscal year at issue").  
	Commissioner Good heard this appeal.  Chairman Hammond and Commissioners Scharaffa and Rose joined her in the decision for the appellant.
 These findings of fact and report are made pursuant requests by both the appellant and appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.
 Barbara J. DeLuca, pro se, for the appellant.
 Julie B. Ross, Esq. for the appellee.
FINDINGS OF FACT AND REPORT
On the basis of testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact. 
On July 1, 2013, the relevant determination date for qualification for the exemption at issue in this appeal, the appellant resided at 30 Hawthorne Street, a parcel of land improved with a single-family residence identified on the appellee's Exhibit A as Parcel ID 14015 0017 ("subject property").  The appellant timely paid the tax on the subject property without incurring interest.  On August 6, 2013, the appellant filed an Application for Statutory Exemption ("Application for Exemption") with the assessors, which the assessors denied on January 28, 2014.  The appellant seasonably filed her Petition Under Formal Procedure with the Board on February 24, 2014.  On the basis of the preceding facts, the Board found and ruled that it had jurisdiction to hear and decide the instant appeal.
The sole issue raised in this appeal was whether the appellant was entitled to the exemption granted by G.L. c. 59, § 5, Clause Forty-First (c) ("Clause Forty-First"), which provides a partial exemption for the real property of seniors age 70 or older who meet certain other requirements.  The appellant is an eighty-six year old woman who has lived at the subject property as her principal residence since 1950.  
In 2004, the appellant and her husband, Frank J. DeLuca, placed the subject property into the Hawthorne Street 30 Realty Nominee Trust ("Nominee Trust").  The appellant and her husband were the settlors as well as the co-trustees of the Nominee Trust.  The appellant and her husband also created individual revocable trusts bearing their names; the appellant and her husband were the trustees of their respective revocable trusts, and each of those revocable trusts in turn held an equal beneficial interest in the Nominee Trust.  The terms of the revocable trusts called for the interests held by those trusts to transfer to a third trust, called the Family Trust ("Family Trust"), upon the death of the trustee of the trust, that is, the appellant or her husband.  The surviving spouse would serve as co-trustee of the Family Trust, along with two of the DeLuca's grown children, and become a lifetime beneficiary of the trust, with power of appointment at death.  
Frank J. DeLuca died in 2012, and the 50% interest in the subject property that had been held by the Frank J. DeLuca 2004 Revocable Trust transferred to the Family Trust, with the appellant and two of her children as co-trustees and the appellant as a lifetime beneficiary.  From 2004 until the time of Mr. DeLuca's death, the assessors granted the Clause Forty-First exemption for the subject property.  Following Mr. DeLuca's death, the assessors denied the appellant's Application for Exemption, contending that the appellant was not entitled to the exemption because the beneficial interest in the subject property was split between the two trusts, and the appellant did not hold the beneficial interest in the subject property in her own, individual capacity.  
Based on the evidence presented, the Board found and ruled that the appellant held a sufficient legal and beneficial interest in the subject property to qualify for the Clause Forty-First exemption and that she satisfied the other requirements of Clause Forty-First.  Accordingly, the Board issued a decision for the appellant in this appeal and granted an abatement of $1,010.
OPINION
     Clause Forty-First provides a partial exemption for "[r]eal property of" persons over the age of seventy who: (1) have been domiciled in the Commonwealth for the preceding ten years; (2) were domiciled at the property in question for the preceding five years, and (3) have "gross receipts from all sources of less than thirteen thousand dollars" and a "whole estate not in excess of twenty-eight thousand dollars."  G.L. c. 59, § 5, Clause Forty-First.   There was no dispute between the parties that Mrs. DeLuca satisfied all of the age, income, and domicile requirements of Clause Forty-First.  The only issue in dispute was whether the appellant held the requisite legal and beneficial interest in the subject property. 
The Supreme Judicial Court has held that a taxpayer must have both a legal and a beneficial interest in the relevant property in order to receive the Clause Forty-First exemption.  Kirby v. Assessors of Medford, 350 Mass. 386, 391 (1966).  In Kirby, the Court held that the appellant had a sufficient beneficial interest in the property, as evidenced by his ability to amend and revoke the trust into which he had placed the property, but he lacked the requisite legal interest because he was not a trustee.  Kirby, 350 Mass. at 387.  The Court refused to extend the exemption to the taxpayer in that case, as he had "voluntarily chosen to hold his property in a form which separates the legal title and the beneficial ownership."  Id. at 390-91.  In contrast, in Board of Assessors v. Bellissimo, 357 Mass. 198, 199 (1970), the Court found that the taxpayers "[held] legal title as well as the beneficial ownership" in the property at issue where they were trustees as well as beneficiaries of the trust, and thus, they qualified for the exemption.  Id. 
In the present appeal, Mrs. DeLuca was a trustee of the Nominee Trust, a co-trustee and beneficiary of the Family Trust, and trustee and beneficiary of her own revocable trust, the only entities that held interests in the subject property.  The Board thus found and ruled that the facts of this appeal were more analogous to those in Bellissimo than Kirby, and the assessors' reliance on Kirby was misplaced, as was their reliance on Department of Revenue ("DOR") Informational Guideline Release No. 91-209.  This publication is just that - a guideline - and the Board is not bound by DOR's interpretation of the statute, where, as here, the interpretation is at variance with the language of the statute.  See Forrestall Enterprises, Inc. v. Assessors of Westborough, Mass. ATB Findings of Fact and Reports, 2014-1025, 1033. 

In conclusion, as the appellant held both a record legal and beneficial interest in the subject property, and satisfied the other requirements of Clause Forty-First, the Board found and ruled that she was entitled to the exemption.  Accordingly, the Board issued a decision for the appellant in this appeal and granted an abatement of $1,010.00.

				       THE APPELLATE TAX BOARD

				   By: ________________________________			                      Thomas W. Hammond, Jr., Chairman


A true copy,

Attest: _________________________
	   Clerk of the Board

 This amount includes the Community Preservation Act ("CPA") surcharge of $10.00.

ATB 2015-476