32 N.W.2d 624 | Wis. | 1948
The state of Wisconsin appeals from an order entered October 31, 1947, confirming an order entered September 30, 1943, tentatively determining the inheritance tax due and payable from the estate of George B. Wheeler, deceased.
George B. Wheeler died testate, a resident of Eau Claire county, Wisconsin, on January 22, 1943, and left surviving his widow, Laura C. Wheeler, a son, Crawford Wheeler, and seven grandchildren. At the time of his death he owned a residence and garage property which were listed in the inventory and appraised at $12,850, together with other property which is not here material. By the terms of the will Laura C. Wheeler, the widow, was to have the use and benefit of the residence and garage property during her lifetime with the right to sell, mortgage, or incumber the same and use the proceeds thereof, conditioned that if she did not sell or dispose of these premises during her lifetime they were to become a part of the trust created in the will. Under the terms of the will the widow received the net income from the trust estate during her lifetime and after her death the trust property passed to the son and grandchildren of testator in accordance with the terms of the trust.
September 30, 1943, an order was entered tentatively determining the inheritance tax due from the estate. In determining the tax on the widow's inheritance the residence and garage premises were included at full appraised value and the tax paid thereon. The widow died December 24, 1944, without having exercised the power of sale of the residence and garage premises, thereby permitting them to become a part of the trust for distribution in accordance with its terms. After due notice and hearing, an order was entered October 31, 1947, confirming and making final the inheritance tax as determined in the order of September 30, 1943. *615
The son and grandchildren of George B. Wheeler, deceased, assert their rights to the residence and garage property in question under a clause in testator's will, from which it must be held they take under the will. Estateof Mitchell (1942),
"It is further ordered that the determination of said tentative inheritance tax and the payment heretofore ordered are subject to confirmation or revision upon the death of Laura C. Wheeler and an appropriate petition and proof of the facts as to whether said Laura C. Wheeler did exercise her power of sale of the homestead during her lifetime, or merely enjoyed a life estate."
It is the position of appellant that the widow received only a life estate with a right of disposition during her lifetime, which she did not exercise, and her inheritance therefore should be taxed only upon the value of the life estate which she enjoyed; that there should be a final determination and adjustment of the tax on the respective interests of the parties as of the time their interests became absolute and capable *616 of calculation as to value. It relies on sec. 72.15(8), Stats., which provides:
"Estates in trust. When property is transferred in trust or otherwise, and the rights, interests or estates of the transferees are dependent upon contingencies or conditions whereby they may be wholly or in part created, defeated, extended or abridged, a tax shall be imposed upon such transfer at the lowest rate which, on the happening of any of the said contingencies or conditions, would be possible under the provisions of sections
Respondents contend that sec. 72.15(8), Stats., does not apply for two reasons: (1) Because there is no contingency affecting the widow's rights, and the value of her rights is equivalent to the value of the whole property and therefore there is nothing left for the statute to apply to; (2) that the statute by its terms applies only where there would be a shift *617 in the rate classification of the transferees which is not the case here.
While ch. 72, Stats., provides for the assessment of an inheritance tax against all rights transferred as of the date of death of decedent the legislature, recognizing that rights transferred may be dependent upon contingencies or conditions whereby they may be wholly or in part created or defeated, provided by sec. 72.15(8), Stats., that a tentative tax be imposed upon such transfer at the lowest rate which upon the happening of said contingencies or conditions would be possible for inheritance-tax purposes. In this manner the inheritance tax is assessed against the entire estate wherever possible, as was done here, and the manner of making such a determination is by a tentative order. The fact that a tax was imposed upon the entire value of this property at the time the tentative determination was made does not mean that the final determination of inheritance tax due and payable should not be in accordance with the actual interests received by the beneficiaries. Here the widow had the right to sell and convey the entire property, and if she had done so the tax as determined in the tentative order would have been the proper tax. If she had disposed of the property the remaindermen would have received nothing under this provision of the will and there would have been no interest to tax. The fact that she had the additional power of disposition added to her life estate, which gave her complete power over this property if she elected to exercise it, did not establish a fee title in her. Sec. 232.08, Stats.; Jones v. Jones
(1886),
Any right or interest of the remaindermen was contingent upon the election of the widow to exercise her right of disposition. It could not be determined at the time of the death of *618 the testator that there would be an inheritance on their part, because the contingent interest could be entirely defeated by the widow. If she had elected to sell the property and retain the proceeds the beneficiaries of her estate would have been subject to an inheritance tax for these same proceeds, and the widow's interest in the estate of her husband would have been subject to the full tax which was assessed at the time the inheritance tax was originally determined. By her failure to exercise the right of disposition, which was merely a privilege granted to her by the terms of testator's will, she received nothing more than a life estate and the remaindermen inherited the property in question subject to this life estate. Sec. 72.15(8), Stats., provides a means of adjusting taxes in respect to contingent estates such as this after the contingency has occurred. The tentative assessment of an inheritance tax against the full value of this property as an interest received by the widow at the time of her husband's death was proper, but by the failure to exercise her right of disposition the tax is to be recomputed and adjusted accordingly.
Respondents contend the statute by its terms applies only where there would be a shift in the rate classification of the transferees, which is not the case here. They rely on the language in sec. 72.15(8), Stats., "then such transferee shall pay the difference between the tax imposed and the tax at the higher rate, and the amount of such increased tax shall be enforced and collected as provided in sections
By the Court. — Order reversed, and cause remanded with directions to enter an order in accordance with this opinion.
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