160 Misc. 141 | N.Y. Sur. Ct. | 1936
This is an application by the trustee to modify the pro forma order of June 1, 1926, fixing the transfer tax, and to compromise, pursuant to section 233 of the Tax Law, the tax on the contingent remainders of two trusts respectively created by paragraphs sixth and ninth of the will.
The trustee seeks upon this application (1) to modify the order of June 1, 1926, by inserting a computation of the lowest possible tax on the contingent remainder of the trust created by the sixth paragraph of the will, and to compromise the tax on the order as so amended; (2) to modify and amend the order of June 1, 1926, by deleting from the computation of the highest possible tax on the contingent remainder of the trust created by the ninth paragraph of the will (a) trustees’ commissions, (b) special guardians’ fees, and (c) death taxes paid to other States; (3) to amend the proforma order by inserting therein the lowest possible tax applicable to any contingency or succession possible under paragraph ninth, and to compromise the tax on the proposed amended order.
The decedent died on January 30, 1925, and by the ninth paragraph of her will established a trust of her residuary estate for the benefit of a granddaughter, Edith L. Rigney. The beneficiary was to receive the income until she reached the age of forty-five years, when the principal was to be paid to her. In the event of her death before reaching that age without leaving lawful issue her surviving, the corpus of the trust was made payable to Mt. Sinai Hospital, a charitable institution. A pro forma order fixing the tax was made on September 30, 1925, in which the diminished remainder of this trust, amounting to $245,481.61, was taxed contingently at the highest possible rate to the executors for the benefit of the one per
The State Tax Commission has no objection to the relief sought in item (1), mentioned above, or to the computation in the petition of the compromise tax on the contingent remainder of the trust created by the sixth paragraph of the will, and the same is, therefore, approved. There is likewise no objection to the deduction under item (2) of the trustees’ commissions and special guardians’ fees. The order may, therefore, be modified as to these items. (Matter of Silliman, 79 App. Div. 98; affd., 175 N. Y. 513; Matter of Morgan, 164 App. Div. 854; affd., 215 N. Y. 703; Matter of Faile, 202 App. Div. 758.)
The application is denied as to item (c), which included taxes paid to other States. By reason of the decisions of the United States Supreme Court in Farmers Loan & Trust Company v. Minnesota (280 U. S. 204) and First National Bank v. Maine (284 id. 312), the imposition by the foreign States of these taxes was held to be unconstitutional. In the face of these decisions, the allowance of the deductions and the modification of the pro forma order at this time cannot be permitted.
The contention of the petitioner with respect to item (3) is that under the will the remainder of the trust created by the ninth paragraph may vest in the charitable institution and that, therefore, the pro forma order should be amended by the insertion of zero as the lowest possible tax instead of the sum of $7,636.58. The application to so modify the pro forma order is denied. As stated by me in Matter of Siegel (post, p. 144), decided simultaneously herewith, when the lowest possible tax has been fixed in the original order and paid to the State, that amount must be used as a basis for composition under section 233 of the Tax Law. In Matter of Moore (160 Misc. 265) I denied a similar application which sought to modify the original order and compromise the tax pursuant to this section, even though in that case it was conceded
Submit order on notice accordingly.