Friday, April 14, 2000
Estate battle near end: Charities must pay tax
BY Dan Horn
The Cincinnati Enquirer
Before his death in 1992, Lloyd Cavett signed a will that divided his fortune between two loves:
His favorite charities and the woman who shared his life for more than four decades.
But Mr. Cavett's will started a legal battle between the charities and the IRS over who deserves a greater share of the millionaire's estate.
Nearly a decade later, that battle is nearing an end.
A decision in U.S. Tax Court last month finally cleared the way for Mr. Cavett's long-time companion, Rose Bell, to inherit $350,000 and the $400,000 home they shared in suburban Wyoming.
The charities, which received about $1.7 million, disputed Ms. Bell's claim to the estate but lost that battle in court several years ago.
They then argued that Ms. Bell — and not them — should pay significant taxes on the estate because the money she received from Mr. Cavett was a “wage,” not a gift.
The accusations outraged Ms. Bell's son, Jerry, who said his mother had a serious, long-term relationship with Mr. Cavett. He said she was not a maid or some other kind of employee.
“This has been rough on my mother,” said Mr. Bell, who lives in Atlanta. “Extremely rough.”
He said his 91-year-old mother, who suffers from dementia, began dating Mr. Cavett in 1948.
Mr. Cavett and Ms. Bell were married to other people at the time, so the couple kept their relationship secret. Ms. Bell divorced in 1956 and Mr. Cavett's wife died in 1963.
A few years later, they moved in together. Mr. Bell said his mother and Mr. Cavett were almost constant companions, sending love letters and cards to each other whenever they were apart.
He found boxes of the letters at the house after Mr. Cavett died.
So it was humiliating, he said, when the charities claimed his mother was nothing more to Mr. Cavett than an overpaid housekeeper.
“My mother was the scapegoat,” he said.
But in a decision in tax court last month, Judge James Halpern ruled that the money Ms. Bell received from Mr. Cavett was a gift.
Mike Schmidt, one of the attorneys for Ms. Bell, said the ruling means the charities will have to pay taxes on their share of the estate.
As the recipient of the gifts, Mr. Schmidt said, Ms. Bell does not owe any tax. The IRS had argued for Ms. Bell's position, while the executors of the estate argued the charities' position.
The charities include the Wyoming Baptist Church, the University of Cincinnati, the Salvation Army, Shriners Burns Institute and the Franciscan Terrace at St. Clare Center.
Mark Denney, an attorney for the executors, said the case is over unless the charities decide to appeal.
Mr. Bell said it's about time.
“It's gone on too long,” he said.
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