157 N.Y.S. 379 | N.Y. Sur. Ct. | 1916
This is an application to modify an order assessing a transfer tax upon the estate of the decedent. The order was entered on the 1st day of February, 1904. The decedent died on the 9th of December, 1902, and at the time of bis death' he was a resident of this State: In paragraph seventh of his will he directed that his residuary estate he held by his trustees; that the rents and profits should be paid to his wife during her life, and that upon her death the sum of $100,000 should be paid by the trustees to such persons' as she during her widowhood by her last will and testament should direct and
The transfer tax appraiser appointed by this court to appraise the estate of the decedent ascertained the value of the widow’s life estate in the entire residuary, and of the remainder after such life estate. The order entered on this report assessed a tax upon the remainder (including the remainder in the $100,000, over which she had a power of appointment), against beneficiaries of the five per cent class. The widow exercised the power of appointment over the sum of $100,000 and this application is made by the trustees to modify the order fixing tax so as to exclude from taxation the property over which the widow exercised the power of appointment.
It is conceded by the state comptroller in the brief filed by him in this matter that the power of appointment given to the widow of the decedent was not absolute, but was contingent upon her remaining the widow of the testator. The property over which such a power may be exercised is presently taxable. (Matter of Burgess, 204 N. Y. 265.) The life tenant having since died, and having exercised the power of appointment, the property passing by virtue of the exercise of the power is taxable as part of her estate. The trustee contends that the death of the widow and the exercise by her of the power of appointment removed the contingency which warranted the taxation of the property subject to the power in the proceeding brought to assess a tax upon the estate of the decedent, and that the surrogate has jurisdiction under section 230 of the Tax Law to modify the order assessing tax so as to exclude from taxation the property over which the widow had the power of appointment. That part of section 230 which the trustee relies upon as authority for his contention reads- as follows-: “ On the happening of any contingency whereby the said property, or any part thereof, is- transferred to a person or corporation • exempt
It is clear that this statute is limited in its application to the cases therein mentioned, namely, where the property is actually transferred to a person or corporation that is exempt from taxation, or where it is transferred to persons who are taxable at a lower rate than that imposed by the order. In the matter under consideration the property over which decedent’s widow had a power of appointment was not transferred by the will of the decedent to a person or corporation exempt from taxation or to a person taxable at a lower rate than that imposed by the order fixing tax; that property was not transferred to any person or corporation by the will of the decedent. He gave to his widow a power to transfer it, and as she exercised the power there was no transfer of the property under his will. Therefore that part of section 230 which provides for a refund when the transfer is made to persons taxable at a rate less than that imposed in the original order does not apply to this matter.
An examination of the transfer tax statute shows that it does not provide a specific remedy for a case where the facts- are similar to those in the matter under consideration. ■ The Court of Appeals in Matter of Burgess (supra,), expressly refrained from indicating the procedure to be followed for the purpose of recovering the excess tax in a case where the property over which a power of appointment may be exercised was taxed in the estate of the donor of the power and was subsequently transferred by the exercise of the power and taxed as part of the estate of the donee.
It seems to me, however, that the surrogate has power to
The petitioner contends that the original order should be modified by deducting from the taxable interests of the residuary legatees the sum of $100,000. This is incorrect, as the value of the widow’s life estate in the sum of $100,000 was transferred under the will of the decedent, and the value of that life interest was therefore taxable. The amount which was taxed in the original order and upon which the surrogate did not have jurisdiction to assess a tax was the value of the remainder after the widow’s life estate in the sum of $100,000. The value of this remainder should be ascertained by the state superintendent of insurance, and the order fixing tax will then be modified by deducting the value so ascertained from the taxable interest of the residuary legatees.
Decreed accordingly.