delivered the opinion of the court:
Defendant, Louis E Aitken, M.D. (hereinafter Dr. Aitken), appeals from the October 30, 1990, order of the circuit court of St. Clair County granting summary judgment in favor of plaintiff, Landmark Trust Company, executor under the last will and testament of Earl T. Aitken, deceased (hereinafter the Executor), and denying Dr. Aitken’s cross-motion for summary judgment.
The major issue we shall address in this case is whether the circuit court of St. Clair County erred in determining that section 24 — 3 of the Probate Act of 1975 (hereinafter Probate Act) (Ill. Rev. Stat. 1989, ch. 110½, par. 24—3) should not cause the abatement of general legacies under the testator’s will in order to pay the death taxes which the residuary estate was not large enough to cover. This section of the Probate Act, which deals with the order of distribution, abatement and contribution on settlement of an estate, provides in pertinent part as follows:
“(b) Unless otherwise provided by the will, if the estate of a testator is insufficient to pay all legacies under his will, specific legacies shall be satisfied pro rata before general legacies, and general legacies shall be satisfied pro rata, without any priority in either case as between real and personal estate.” (Emphasis added.) (Ill. Rev. Stat. 1989, ch. 110½, par. 24—3(b).)
The Executor had determined that article second of decedent’s will provided against abatement of any preresiduary (specific or general) legacies. Article second of the last will and testament of Earl T. Aitken, deceased, provided as follows:
“I direct my executor, hereinafter named, to pay from the residue of my estate all my debts, funeral expenses, administration expenses and all estate, inheritance, succession and transfer taxes which may become due by reason of my death. Interest and penalties shall be paid in the same manner as any tax. My executor shall not seek contribution or reimbursement from any person for payment of any part of such taxes." (Emphasis added.)
The Executor determined that the italicized language exhibited an intent by the testator that if there was a shortfall in the amount of the residuary estate after payment of the above expenses, the deficit should be apportioned among all beneficiaries of probate property under the will and all such legatees should contribute toward payment of the deficit. Accordingly, the Executor prepared a residuary-deficit-allocation chart by which the Executor determined that Dr. Aitken’s share of the deficit, based upon the ratable portion of Federal estate tax liability and Kentucky inheritance tax generated by the decedent’s interest in certain horses specifically bequeathed to Dr. Aitken, was $99,814.04.
After Dr. Aitken’s refusal to pay any portion of the residuary estate deficit allocated to his specific bequests, the Executor filed on June 22, 1989, its petition to construe will and for declaratory judgment. The Executor joined as defendants all named beneficiaries under the will. Defendant Beverly Ann Ederle, the largest general legatee under decedent’s will, admitted all of the allegations in the Executor’s petition and concurred in the Executor’s opinion that the taxes had been properly apportioned as per the residuary-deficit-allocation chart. Consistent with his refusal to pay the amount determined by the Executor to be owed pursuant to the residuary-deficit-allocation chart, Dr. Aitken denied the relevant paragraphs of the petition and asked the court to construe the will such that section 24 — 3(b) of the Probate Act would control payment of the residuary deficit. No defendant, other than Dr. Aitken and Beverly Ann Ederle, filed a responsive pleading to the Executor’s petition.
Cross-motions for summary judgment were filed by Dr. Aitken and the Executor, and these motions were considered by the court based upon a stipulation of facts filed June 14, 1990, and the aforesaid parties’ agreement that the matter to be determined was one of law, the construction of decedent’s will. (See In re Estate of Bresler (1987),
The parties’ stipulation of facts indicates that Earl T. Aitken died on March 13, 1988, domiciled in St. Clair County, Illinois. Decedent’s will dated May 7, 1987, and a first codicil thereto dated February 2, 1988, were collectively admitted to probate in the circuit court of St. Clair County, and plaintiff was appointed executor pursuant to article sixteenth of the will, on April 11, 1988. In addition to article second recited above, article seventeenth of the will provided that the Executor had the power and discretion “[t]o make such election affecting taxes as the executor deems advisable, without regard to the relative interests of the beneficiaries and with or without making any compensating adjustments therefor.”
Articles third through thirteenth of the will provided for certain specific bequests and pecuniary general bequests. Of the general bequests which totalled $535,000, article thirteenth made the largest general bequest, in the amount of $500,000, to Beverly Ann Ederle, decedent’s stepdaughter. Specific bequests of decedent’s automobiles and household and personal effects were also made to Beverly Ann Ederle, in article third of the will. Articles fifth and seventh made specific bequests of the decedent’s interest in all horses owned in common with Nancy Vanier and Michael Jakovac at the time of his death to, respectively, Vanier and Jakovac.
Article fourth of decedent’s will bequeathed to his brother, Dr. Aitken, all of the decedent’s interest in all horses owned by the decedent and Dr. Aitken in common at the time of the decedent’s death and all of the decedent’s interest in all horses in which he and Dr. Aitken owned an interest in common at the time of the decedent’s death, “including my fifty percent (50%) share of the interest he and I own in common in a certain stallion named DANZIG, together with all income we are to receive from the interest we own in said stallion named DANZIG.” Article twelfth of the will, as amended by the codicil thereto, declared the intention of decedent that on his death all of his interest in any horse in which he owned an interest in common with another person, except a certain horse named Niqua, shall pass to and be the property of that other person and instructed the executor of his last will and testament to make no claim to such interest. Said article further provided that decedent’s interest in Niqua, which was owned in common with Michael Jakovac, was bequeathed to Carl Ederle, husband of Beverly Ann Ederle.
Article fourteenth of the will, as amended by codicil, named several individuals and two charities as residuary legatees. Dr. Aitken and Beverly Ann Ederle were each to receive 221/a% of the residuary estate, and the remaining individuals and charities were each to receive 5% of the residuary estate.
As reported on decedent’s Federal estate tax return, probate assets valued at $1,464,934.33, joint property valued at $183,595.94, and insurance proceeds valued at $963.78 were included in decedent’s gross estate. In addition to the Federal estate tax return, the executor filed on December 13, 1988, an Illinois estate tax return and a Kentucky nonresident inheritance and estate tax return. The Executor made tax payments of $316,991.91, $48,538.31, and $44,202.47 to the appropriate taxing authorities, although the Executor anticipated a refund in the Federal and State estate taxes paid of between $35,000 to $45,000. The residuary probate estate was insufficient to pay all death taxes and debts and administrative expenses, with a projected resulting shortage of $220,911.25 after exhaustion of the residue, subject to the anticipated refund from the amended estate tax returns.
The circuit court recited the following conclusions of law in its order granting summary judgment to the Executor:
(1) That summary judgment is appropriate in this case.
(2) That although Illinois follows the “burden on the residue” rule with respect to allocation of estate taxes arising by reason of a decedent’s death, because there was a residuary estate deficit there was no residuary estate out of which to pay estate taxes and so the “burden on the residue” rule has no application in this case.
(3) That if section 24 — 3(b) of the Probate Act of 1975 were applicable in the present case, the specific legatees under decedent’s will would not be required to contribute any funds toward satisfaction of the residuary estate deficit because complete abatement of all general legacies under the decedent’s will would be more than sufficient to cover the residuary estate deficit.
(4) That the essential question in this case is whether section 24 — 3(b) applies; in other words, does the will provide otherwise within the meaning of section 24 — 3(b)?
(5) That the first sentence of article second of the will is irrelevant to a resolution of the legal issue at hand because it does not address expressly or by implication how to allocate the remaining burden of debts, expenses and death taxes after the residuary estate has been exhausted.
(6) That the first sentence of article second does not impliedly invoke Illinois’ law of abatement (section 24 — 3(b)) as argued by Dr. Aitken.
(7) That the second sentence of article second has no relevance to this case because no interest or penalties have been or will be paid.
(8) That the only sentence of article second that has any possible applicability to this case is the third sentence, and by this sentence, the decedent indicates his intention that all persons (other than residuary legatees, whose legacies are directed under the first sentence of article second to be the source from which death taxes are to be paid), without distinction among specific legatees, general legatees, recipients of nonprobate property by survivorship and beneficiaries of life insurance policies, be treated conceptually in the same manner and considered in the same category in allocating the burden of death taxes. The third sentence of article second “provides otherwise” within the meaning of section 24 — 3(b), and therefore the rules of abatement as set forth in section 24 — 3(b) are inapplicable to this case.
(9) That there are no reported Illinois cases that address the meaning of the type of language contained in the third sentence of article second in a situation in which the residue is exhausted and the beneficiaries and distributees of probate and nonprobate property disagree as to how the amount of death taxes not able to be paid from the residuary estate should be apportioned.
(10) That the following cases, cited by plaintiff in its memorandum in support of summary judgment, Mosher v. United States (D. Conn. 1975),
(a) The residuary estate is insufficient to pay all death taxes in full.
(b) The will contains preresiduary specific and general legacies.
(c) In the absence of a contrary testamentary provision, State law mandates that certain preresiduary legacies abate before others.
(d) The will contains a tax clause that directs payment of all death taxes and transfer taxes from the residuary estate and contains language ostensibly absolving all recipients of property as a result of the decedent’s death from any obligation to defray death taxes. Also, in Mosher the will specified that death taxes were not to be charged against, or be subject to reimbursement by, any beneficiary, language strikingly similar to that in the present case.
(11) That Dr. Aitken’s attempts to distinguish Mosher and White, in his reply to plaintiff’s motion for summary judgment, are not persuasive. While in Mosher it is true that a recited fact was that all specific legacies were paid in full, the issue of abatement or nonabatement of specific legacies was not litigated in Mosher. Contrary to Dr. Aitken’s position, the White case does not appear to have been resolved on the basis of the Pennsylvania Apportionment Act, and this case discussed and rejected the rule of abatement.
(12) That inheritance tax is a tax imposed not upon decedent’s estate but upon the right or privilege of receiving property from such estate and as such is a charge against the share or interest with respect to which such tax is assessed. In the absence of a contrary provision in the will, the ultimate burden of an inheritance tax falls upon the recipient of the property giving rise to such tax even though the executor is personally liable to pay the tax in the first instance.
(13) That the plaintiff acted fairly, reasonably and in conformity with Illinois law by considering the residuary estate deficit as consisting, on a pro rata basis, of Federal estate tax, Illinois estate tax and Kentucky inheritance tax.
(14) That the portion of the residuary estate deficit allocable to payment of Kentucky inheritance tax should be apportioned, pro rata, between the recipients of property as to which Kentucky inheritance tax was assessed.
The court ruled that the Executor’s deficit-allocation chart attached to its petition to construe will and for declaratory judgment set out a fair, equitable and reasonable method of apportioning the residuary estate deficit and was in conformity with Illinois law. The court ordered that the rationale and methodology employed in the deficit-allocation chart be used in determining each of the listed legatees’ shares of the residuary estate deficit, after the Federal and State estate and inheritance tax liability was finally determined. The court ordered that the Executor’s and Dr. Aitken’s attorney fees and costs incurred in connection with this action be paid out of the principal of decedent’s estate as an expense of administration.
While we agree with the circuit court that the essential question in this case is whether section 24 — 3(b) of the Probate Act applies, we must disagree with the conclusion of the court that it does not, based on our review of Illinois case law. The operative question is whether article second “provided otherwise” than for abatement of general legacies when there is a shortfall in the residuary estate, by stating, “[m]y executor shall not seek contribution or reimbursement from any person for payment of any part of such taxes.” The will must be considered in its entirety to determine the testator’s intent and, to the extent possible, that construction should be adopted which will give effect to all language employed; no technical rule of construction, however, will be permitted to interfere with ascertaining the testator’s real intention. (Griffin v. Gould (1979),
“Equitable apportionment” is the term which is used to describe the process of distributing the burden of certain estate expenses among those beneficiaries in the same proportion as they respectively cause such expenses to be incurred. (Horwitz v. Ritholz (1984),
In the instant case the executor sought to apply the doctrine of equitable apportionment beyond the application heretofore recognized by the Illinois Supreme Court, by asking the court to construe the language of article second, “[m]y executor shall not seek contribution from any person for payment of any part of such taxes,” to be a direction that equitable apportionment be utilized among beneficiaries of the preresiduary probate estate where the residuary estate is insufficient to satisfy payment of the death taxes directed to be paid by the will. We do not, however, construe the language in article second as a direction or an intent by the testator that equitable apportionment be utilized for payment of the deficit, based on our review of Illinois case law and a reading of the will in its entirety. We further decline to extend the doctrine of equitable apportionment beyond the parameters set by the supreme court in Gowling and Roe, absent a clear indication in the will that the testator intended for equitable apportionment to be utilized.
A related issue of whether equitable apportionment of Federal estate tax liability among every beneficiary, preresiduary and residuary, was appropriate under a will where only probate assets were involved was decided by this court in In re Estate of Maddux (1981),
While we agree that the burden-on-the-residue rule of construction is not applicable in the instant case, it is not because there was no residuary estate, as the circuit court found, but because the testator specified what property shall assume the burden of Federal estate taxes, other taxes and costs of administration. In the instant case the decedent specifically directed that all taxes which may become due by reason of his death be paid from his residuary estate. Therefore, the direction for payment has the same effect as application of the burden-on-the-residue rule with respect to Federal estate taxes and also makes inapplicable the equitable apportionment doctrine set forth in the Gowling and Roe decisions. The residuary estate must first be utilized to satisfy Federal estate taxes and other taxes and costs of administration, without contribution from the recipients of nonprobate property, the joint tenancy interests or life insurance proceeds for the Federal estate tax liability generated by those assets.
We further acknowledge the distinction between inheritance taxes and estate taxes noted by the circuit court in its conclusions of law. However, a testator may specify what property shall assume the burden of inheritance tax on the transfer of or the right of succession to his estate. (In re Estate of McDonald (1942),
We also disagree with the conclusion of the circuit court that a residuary estate deficit must be categorized as the nonexistence of a residuary estate. In order to calculate the residuary estate and determine that there was a deficit, the executor had to segregate the specific legacy assets from the general pecuniary or liquid assets and thereafter determine what was left over after the general bequests would be paid. Implicit in a finding that there was a $220,000 deficit in the residuary where the estate and inheritance taxes paid totalled $400,000 is that there was a certain amount of money that the executor had available out of the residuary to pay towards the obligations singled out in sentence one of article second. We find, based on the facts presented, that there was a residuary estate, but that it was insufficient to satisfy the specified residuary obligations. The issue, as refined, is what, if any, direction was given by the testator concerning payment of the deficit.
Under Illinois law a testator is deemed to have acted upon the belief that his estate would be sufficient to answer the purposes to which it is devoted, but, if the chances of deficiency are anticipated, the order in which a legacy shall abate may be controlled by direction of the testator expressed in his will. (In re Estate of McDonald,
As one Illinois court has previously stated, “[a] rule of construction which prefers specific over general bequests and devises in the allocation of the burden of debts and taxes, which in substance is the residue rule which Illinois courts have long followed, is not manifestly unfair or a great distance apart from what a decedent’s desires might ordinarily be assumed to be if [the] matter had been given full and adequate consideration.” (In re Estate of Phillips (1971),
Moreover, our review of the facts herein indicates that the only legacies over which the testator indicated any preference were the specific legacies of his interests in horses owned in common with another person, except for a horse named Niqua, that is, the horses owned in common with Dr. Aitken, Nancy Vanier and Michael Jacovac. In article twelfth the testator provided that the executor was to make no claim to such interest. We further find that the language in article second, “my executor shall not seek contribution or reimbursement from any person for payment of any part of such taxes,” is a direction against equitable apportionment, not against abatement, consistent with the above-noted Illinois decisions. Thus, the testator’s intention gleaned from the will as a whole does not support an intention that the testator wanted equitable apportionment of the residuary estate deficit among the preresiduary legatees and recipients of nonprobate property.
We also note that in Mosher v. United States (D. Conn. 1975),
While the Mosher and White decisions were relied upon by the circuit court in reaching its decision because the cases had certain facts in common with the instant case, we decline to accord them any authority with respect to our decision, particularly because, as Dr. Aitken duly notes, unlike Illinois the jurisdictions in which Mosher and White were decided had enacted equitable apportionment statutes. The enactment of such statutes creates a presumption that the testator intended that the taxes be apportioned in the statutory manner. (Annot.,
We hold, therefore, that the testator did not “provide otherwise” than for the statutory abatement scheme set forth in section 24 — 3(b) of the Probate Act and that the circuit court of St. Clair County erred in entering summary judgment for the Executor on this issue. Accordingly, we reverse the October 30, 1990, order of the circuit court of St. Clair County and enter judgment in favor of defendant, Louis F. Aitken, M.D., on his cross-motion for summary judgment.
Dr. Aitken and the Executor have both prayed for an order from this court that their respective attorney fees and costs incurred in this appeal and in any subsequent related proceedings before the trial court be paid from the assets of the estate as an expense of administration. An ambiguity in a will justifies suit for construction, and the trial court, finding the need for construction, properly allowed attorney fees and costs for both parties to be charged as a cost of administration. (See Orme v. Northern Trust Co. (1962),
Reversed and remanded.
HARRISON and LEWIS, JJ., concur.