## Facts

- John O’Connor died intestate owning real property in Adams County, Nebraska.
- No heirs were found, resulting in a failure of heirs under Nebraska law.
- By Nebraska statute, upon failure of heirs, title to the real estate vests immediately in the State without any inquest or similar proceeding.
- Adams County initiated proceedings seeking to treat the State’s receipt of the property by escheat as a taxable “benefit” under the inheritance tax laws.
- The district court imposed inheritance tax liability on the State as though it took as a beneficiary.
- The State appealed to the Nebraska Supreme Court.

## Issues

1. Whether the State, when taking real property by escheat due to failure of heirs, takes as a beneficiary or successor subject to Nebraska’s inheritance tax.
2. Whether an inheritance tax, framed as a tax on succession, applies where property reverts to the State by escheat.

## Decision

- The Nebraska Supreme Court reversed the district court.
- The court held the State does not take by succession or as a beneficiary when property escheats; it takes as a reversioner.
- Because the inheritance tax is imposed on succession rather than reversion, the escheated property is not subject to inheritance tax.
- The proceeding to impose inheritance tax on the escheated estate was dismissed.

## Legal Principles

- Escheat is the lapse or reversion of real estate to the State as the original and ultimate proprietor when persons legally entitled to hold the property fail.
- Upon failure of heirs, title vests immediately in the State by operation of statute, without the need for additional proceedings.
- Inheritance tax statutes taxing succession (inheritance, devise, or death-related transfers) do not apply when there is no successor and the State receives property by reversion.
- The State is not a “beneficiary” under inheritance tax statutes merely because it acquires title after a failure of heirs.

## Conclusion

When real property escheats to Nebraska for want of heirs, the State takes by reversion rather than taxable succession, so the inheritance tax does not apply and the State owes no inheritance tax on the escheated property.


Adams Cnty. v. State (In re O’Connor’s Est.), 126 Neb. 182, 252 N.W. 826 (Neb. 1934)