184 Misc. 375 | N.Y. Sur. Ct. | 1944
The issue presented in this executor’s final accounting is whether or not there should be an apportionment of the Federal and State estate taxes pursuant to section 124 of the
Three separate kinds of property were included in the gross taxable estate in the Federal and State tax proceedings. The figures in the State proceeding differ slightly from those in the Federal proceeding but this difference in no way affects the question of apportionment. The properties set forth in the Federal proceeding were (1) property over which the testator exercised the power of appointment, $2,600,128.44 under the will of his uncle, Benjamin Hart, (2) property owned by the testator, $80,769.38 and (3) property transferred by the testator in his lifetime to his wife, Martha, in contemplation of his death, $112,351.09.
In the trustee’s accounting in the estate of Benjamin Hart, the validity of the exercise of the power of appointment by the testator was passed upon and in supplemental decision in that proceeding (N. Y. L. J., Dec. 27, 1939, p. 2319, col. 6), I directed that all estate taxes, both Federal and State, be paid in the first instance out of the appointed fund and reserved all questions of apportionment until the present accounting by the executor of the estate of the donee of the power of appointment. The validity of the exercise of the power of appointment was sustained (Matter of Hart, 262 App. Div. 190), but pending an appeal to the Court of Appeals a settlement agreement was made by the persons interested. All of the property subject to the power passed under the will of this decedent and together with his individual property, forms part of his residuary estate. In respect of this combined residuary fund, the fourteenth paragraph of the testator’s will provides: “ I direct that all estate, transfer and inheritance taxes to which my estate .or the transfer of any part thereof shall be liable be paid from my residuary estate as expenses of administration.” Since under the testator’s will, the appointed fund and his individual estate have been consolidated into one fund constituting his residuary estate from which all taxes are directed to be paid as administration expenses, there is no necessity for an apportionment of taxes between the two parts of the single fund. The sources of the parts of the unified fund are immaterial. It is only after the payment of taxes as an administration expense out of the combined funds that the true residuary estate of the testator is ascertained. I hold, therefore, that an apportionment between the sources of the residuary fund is not required.
I hold that under the circumstances in this case and the comprehensive language contained in the fourteenth paragraph of the will directing the payment of all taxes out of the residuary as expenses of administration includes the taxes imposed upon the inter vivos gifts to the widow made by the decedent in his lifetime. The direction comes within the specific exception to apportionment under the' terms of section 124 of the Decedent Estate Law. (Matter of Aldrich, 259 App. Div. 162; Matter of Henderson, N. Y. L. J., April 17, 1942, p. 1626, col. 4; Matter of David, N. Y. L. J., Nov. 17, 1941, p. 1530, col. 7; Matter of Lurie, N. Y. L. J., Nov. 22, 1940, p. 1655, col. 3; In Re Gibbs, 41 N. Y. S. 2d 60.) In view of this decision the Federal and State estate taxes have been properly paid out of the appointed fund by the representative of the estate of Benjamin Hart and no apportionment is necessary.
Submit decree on notice construing the will and settling the account accordingly.
Providing that whenever an executor has paid a death tax “with respect to any property required to be included in the gross estate e * *, the amount of the tax so paid, except in a case where a testator otherwise directs in his will, • • • shall be equitably prorated among the persons interested in the estate * * * — [Rep.