48 N.J. 379 | N.J. | 1967
The opinion of the court was delivered
This case involves the allocation of the burden of the federal estate tax. After specific devises and bequests to his widow and his two children by a former marriage, the testator directed that the three shall share the residue equally. Those dispositions to the widow qualified for the marital deduction authorized by 26 U. S. C. A. § 2056. The question is whether her share of the residue should be calculated before or after payment of the federal estate tax. The will, which contains no express provision as to taxes, was executed in 1947 and hence before the innovation by Congress of the marital deduction in the following year. The testator died in 1964. The trial court decided the widow was entitled to a full third of the residue without any reduction because of the estate tax, 88 N. J. Super. 278 (Ch. Div. 1965), but the Appellate Division held she must absorb a third of the tax, even though the gifts to her did not generate any part of the tax and the result thus reached would under 26 U. S. C. A. § 2056(b) (4) reduce the amount of the marital deduction and thus increase the total tax liability of the estate. 91 N. J. Super. 255 (1966). We granted certification, 47 N. J. 573 (1966). We think the trial court’s judgment should be upheld.
The Congress authorized the marital deduction to permit "geographic equalization” between states, such as ours, which do not have community property law and states which do. Thus, a testator in our State may provide for his or her spouse, to the limits set forth in the federal statute, without incurring any estate tax liability on that account. Absent an express statement in the will, we should start with the assumption that the testator intended the maximum tax advantage for the estate and maximum benefit to the spouse within the limits of his gift to her. The plan of a will may of course suggest that a testator intended to depart from that approach. For example, if in the case at hand there were appreciable gifts to persons other than the residuary beneficiaries, it might be argued that the testator intended the residuary beneficiaries to share so much of the tax burden as would be allocable on a hypothetical apportionment to such other beneficiaries, that is to say that before calculating the shares of the residuary beneficiaries there would be deducted from the residue that portion of the total tax liability as is
The judgment of the Appellate Division is reversed and the judgment of the trial court is affirmed.
Justice Proctor and Justice Hall dissent for the reasons expressed by Judge Coneoed in the Appellate Division.
For reversal — Chief Justice Weintratjb and Justices Jacobs, Erancis, Sohettino and Haneman — 5.
For affirmance — Justices Proctor and Hall — 3.