106 F. Supp. 986 | D.D.C. | 1952
The principal question presented in this proceeding is, out of what assets of a decedent’s estate the Federal estate tax should ■he paid,- — specifically, whether realty -contained in the residue is liable for the payment of the tax, if the personalty is insufficient for that purpose.
This action is brought for the construction of a will. As there are no issues of ■fact and only questions of law are to be determined, the plaintiff moves for summary judgment. The defendants acquiesce in this procedure.
The will contains an express direction that the debts of the testatrix and her funeral expenses be paid from her “money in the banks”. • It appears, however, that this fund is not sufficient to discharge the Federal estate tax.
The will also contains the usual residuary clause. The residuary estate consists both of personalty and real property. It-is not disputed that after the money in the banks has been exhausted, the personalty in the residue should be applied to the payment of the Federal estate tax. It appears, however, that even this amount will not be sufficient to discharge this liability in its entirety. There is a dispute as to whether the real property in the residue should next be appropriated to that end.
It was held in Hepburn v. Winthrop, 65 App.D.C. 309, 83 F.2d 566, 105 A.L.R. 310, that the Federal estate tax partakes of the nature of administration expenses and that it is payable out of that portion of the residue to which the executor takes title. An attempt on the part of the executor in that case to charge the realty in the residuary estate with a proportionate share of the Federal estate tax was defeated. It appears, however, that there was sufficient money in the personalty, which formed a part of the residue, to pay the entire Federal estate tax. In other words, the Hepburn case is authority for the proposition that the-"personalty in the residue is chargeable with the payment of the Federal estate tax, and that reimbursement may not be required by the executor out of the real property. That decision does not pass upon the question, however, whether the realty in the residue may be applied to the payment of the Federal estate tax, if the personalty is riot sufficient for that purpose. This point was not involved.
In Vogel v. Saunders, 68 App. D.C. 31, 92 F.2d 984, it was held that both the personalty and the realty embraced by the residuary clause are chargeable with the payment of the decedent’s debts, and that this liability is not limited to the personalty. It would seem logical to apply the same rule to the Federal estate tax. True, this tax is not a debt of the deceased. It is an excise levy upon the transfer or transmission’ of the decedent’s estate, Y.M.C.A. v. Davis, 264 U.S. 47, 44 S.Ct. 291, 68 L.Ed. 558.
In this case no injustice would result from this disposition, as the residuary legatee.and devisee is also the beneficiary of the largest specific devise and bequest in the earlier clauses of the will.
If a deficiency still remains after applying the money in the banks and the entire residuary estate to the payment of the Federal estate tax and the decedent’s debts, the specific legacies and devises must abate proportionately in order to make up the balance. This step leads to the final question, namely, whether the bequest in the seventh paragraph -of the will .should be deemed specific or general. The provision therein contained is to the effect that the balance of the money- in the banks after the payment of debts and funeral expenses, together with “all my
Counsel will submit a proposed judgment in accordance with the foregoing rulings.
. Emphasis supplied.