125 Misc. 321 | N.Y. Sur. Ct. | 1924
This is an application by a legatee to compel the payment of an annuity of $2,000, subject only to deductions on account of the Federal income tax and a sum sufficient to amortize the transfer tax. The annuity is given in a codicil which reads, in part, as follows: “I direct my said trustees to pay to my cousin, Jennie Bastyr, daughter of Rose Abeles, the sum of two thousand dollars ($2,000) per year in quarterly payments of five hundred dollars ($500) each, beginning three months after my death, as long as she shall live. * * * I direct my said trastees to set apart from my residuary personal estate such funds as in their judgment shall be sufficient when invested to produce as income the said annuity, and said funds shall, subject to the payment of said annuity, fall into the residue of my personal estate.”
To provide for the annuity the trustees set apart funds in the sum of $38,036.35. This was sufficient to produce the annuity directed to be paid by the codicil. The transfer tax valuation of the annuitant’s interest was fixed at $27,108, and the tax thereon assessed at $1,476.48. The tax on the remainder was $327.85. The total tax, amounting to $1,804.33, was deducted by the trustees
In this case, therefore, the sum of $327.85 should not have been deducted from the fund set up, but should have been paid by the residuary legatees, who take as transferees both the remainder and the residuary estate. The fund must, therefore, be reimbursed in the sum of $327.85. While the testator calls the legacy to Jennie Bastyr an annuity, the effect of his codicil is to bequeath her the income on a fund sufficient to yield $2,000 a year. The trustees were correct in first setting up the fund, and the income received is subject to the deductions made, including commissions. (Matter of Tracy, supra; Surrogate’s Court Act, § 285.) The case of Ex parte McComb (4 Bradf. 151), relied upon by the attorney for the petitioner, was decided in 1856, long before the enactment of a Transfer Tax Law. It has been entirely overruled by the decision, of the Court of Appeals in Matter of Tracy (supra).
Submit decree on notice accordingly.