160 N.Y.S. 684 | N.Y. Sur. Ct. | 1916
This is an appeal from an order entered in a proceeding brought to assess a tax upon a transfer of property passing under the will of the decedent. By the third paragraph of the will the testator gave all his estate, real and personal, to his wife, Emily Thom Post, “ to have, hold, use, occupy and enjoy the same for and during her natural life, with full power and authority in her absolute discretion to sell all or any part of the realty * * . * and to sell' or otherwise dispose of the personalty, and to have, use and enjoy the proceeds' of any such sales without liability to account for either principal or interest, or the income of said residuum of my estate.”
The appraiser ascertained the value of decedent’s residuary estate to be $297,490.66, and the order entered upon his report assessed a tax on this amount, less an exemption of $5,000, against the widow at the rate of taxation provided by section 221a of the Tax Law in force at the date' of decedent’s death. The widow contends upon this appeal that the only interest in the estate which is taxable at the present time is the value of her life estate in the residuary, and that the remainder after such life estate should be suspended from taxation until her death.
In proceedings brought to assess a tax upon estates where the life tenant was empowered by the will to use the principal fund it was the practice, prior to the decision in Matter of Zborowski (213 N. Y. 109), to ascertain the value of the life estate, assess a tax on such value, and suspend taxation upon the remainder. ' (Matter of Babcock, 37 Misc. Rep. 445; affd., 81 App Div. 645; Matter of Granfield, 79 Misc. Rep. 374.) The decision in Matter of Zborowski, however, appeared to cast some doubt upon the correctness of that practice, and this court has recently held that in such cases the remainder after the life estate should be presently taxed at the highest rate. (Matter of Blun, N. Y. L. J. March 28, 1916; Matter of Neher, 95 Misc. Rep. 68.) The recent decision of the Court of Appeals in Matter of Terry (218 N. Y. 218), in which Matter of Zborowski "is distinguished, would seem to indicate that the entire estate should be taxed against the person who has the power to use and dispose of the principal, and that taxation on the interests of the remaindermen should be suspended until they vested' in possession. As I understand the decision in
In the matter under consideration the entire residuary estate is given to the decedent’s widow for life, with power to use and enjoy it and without liability to account for either princial or interest. Under section 140 of the Real Property Law, this is an absolute powér of disposition, except as to any future estate limited thereon in case the power of absolute disposition is not executed. I have repeatedly held that such a power is a base fee. . Therefore, the entire estate belongs to the widow for all purposes, except that of testamentary disposition. (Farmers’ Loan & Trust Co. v. Kip, 192 N. Y. 266.) This would seem to bring her interest within that part of section -230 which reads: “ In estimating the value of any estate or interest in property, to the beneficial enjoyment or possession whereof there are persons or corporations presently entitled- thereto, no allowance shall be made on account of any contingent incumbrance thereon, nor on account of any contingency upon the happening of which the estate or property or some part thereof or interest therein "might be abridged, defeated or diminished.” The widow is presently entitled to the beneficial enjoyment of the entire residuary estate, but her right to- use it may be defeated her death before she has used or disposed of it. This contingency will not, however, under the language of section 230 above quoted, prevent the present valuation and taxation of the entire estate. It is transferred to her under the decedent’s will, and the State imposes a tax upon the value of the property
Order affirmed.