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Court Decides if Widow Entitled to Maximum Exemption Regarding Estate Tax


Probate Laywers said that sources revealed that the decedent died leaving a joint will entered into with his wife. Under the provisions of that will all property of the person first dying is bequeathed to the survivor; upon the death of the survivor ‘all of the property of which he or she shall be possessed, including such property as he or she shall have acquired under the terms of this Last Will and Testament, shall go’ to a daughter with a gift over if said daughter predeceases the survivor. The Tax Commission urges that the widow is not entitled to the maximum exemption because the taxable estate transferred to her is not ‘indefeasibly vested’ within the meaning of section 958(b)(1) of the Tax Law. It argues that the joint will is a contract binding upon the survivor, and that the widow, at most, has the equivalent of a life estate, the remainder of which passes to the daughter upon her death.

Although both parties base their contentions upon the provisions of the joint will, that instrument has not been offered for probate. Ordinarily a will is not presumed valid until probated, as before such approval there is nothing to be construed. However, SCPA 2002 provides that the surrogate’s court of every county having jurisdiction of the estate of a decedent under the provisions of the tax law relating to transfer or estate taxes shall have jurisdiction to hear and determine all questions arising thereunder, including specifically, but without limitation, jurisdiction to fully determine the amount of tax to be imposed. Aside from the ordinary jurisdiction of the surrogate, this is a special grant of power in broad and comprehensive language. There can be no good reason for hampering the power conferred by any construction that would take from the court the authority to decide every question that may arise in the tax proceeding which may be necessary in order to fully discharge the duties imposed by the law. As an incident to determining the estate tax, the court, in this instance, must necessarily interpret the terms of the joint will. Under such circumstances a construction of the will is proper despite the fact that the will has not yet been probated.

A New York Estate Lawyer said that furthermore, SCPA 209(4) provides, in part, that the court has power ‘to determine a decedent’s interest in any property claimed to constitute a part of his gross estate subject to estate tax and to determine the rights of any persons claiming an interest therein as between themselves, And to construe any instruments made by him affecting such property.’ One of the issues raised herein is whether the joint will is a contract binding upon the survivor. Though the contract, if one was created, is tantamount to a testamentary disposition, it need not comply with the statutory requirements for the execution of wills. The court is thus interpreting the validity of the document not as a will but as a contract, which is an instrument within the meaning of SCPA 209(4).

Passing on to the merits of the appeal, the appraiser’s report reflects an allowable exemption to the widow of a certain amount which is the present value of her life interest in the estate. In support of the maximum exemption, it is urged by the widow that because the terms of the will grant her an unlimited power to invade principal, her interest is equivalent to an unrestricted fee and is indefeasibly vested within the meaning of section 958(b)(1). That section, applicable to estates of persons dying on or after April 1, 1963 provides, in part, that one of the interests in property eligible for exemption is the amount of the New York taxable estate transferred to and indefeasibly vested in a surviving spouse, but not to exceed $20,000. It has been stated that the phrase ‘indefeasibly vested’ means ‘absolute,’ ‘no strings attached,’ ‘not subjected to being defeated or avoided,’ ‘incapable of being annulled’.

In the case at bar, it is clear from the language used in the will that the survivor of husband and wife was to be unreservedly provided for in his or her lifetime. It is also apparent that subject to such provision, it was the intent of the parties that any assets not actually consumed during the lifetime of the survivor, the widow, were to pass to the named beneficiary, a daughter, as remainder man. The will limits the gift to the widow to a life estate with a right to use as much of the principal as desired, but with the limitation that the remainder thereof be given to such remainder man. Under the terms of the will, the gift to the appellant is not absolute and unrestricted. Schedule E of the appraiser’s report indicates jointly held property in the amount of $20,124.38 which normally would pass outright to the widow by right of survivorship. If this were the case, the provisions of the will would affect only the so-called ‘testamentary estate’ and not property passing outside the will. Thus it may be argued that the widow is entitled to the maximum exemption by reason of the jointly held property being indefeasibly vested in her. The question is whether any property held in the names of either or both passes outside the will, or whether the will be its terms is a contract controlling the devolution of any property so held.

Queens Probate Attorneys in Azzara v. Azzara, the Appellate Division, Second Department, stated: ‘While neither a husband nor a wife can dispose of property owned by them as tenants by the entirety so as to affect the right of survivorship, they may do so by acting in concert or by a joint will, or by a contract.’ Such a binding agreement is established when the joint will expressly contains an agreement that it will not be revoked. The record herein does not contain any evidence of the circumstances leading up to the execution of the joint will. In the absence of such evidence the court may look to the instrument itself to determine whether it establishes a contract or agreement of the parties for the disposition of their property on the death of the survivor of them. Clear evidence of such a contract or agreement to renounce the right to alter or revoke a will is required.

Long Island Probate Lawyers said there the language of the instrument itself indicates the agreement of the parties to make a disposition of all their property as therein provided. The language of the will imports the joint disposition of the collective property of both, not the independent disposition by each of his own. The pronoun ‘we’ is used herein instead of ‘I,’ ‘our’ instead of ‘my,’ and ‘us’ instead of ‘me.’ The court accordingly determines that the joint will was executed pursuant to a contract to make a gift of the collective property to the named beneficiary, effective upon the survivor’s death, but binding as of the signing of the joint will. Since the will establishes a contractual agreement that the survivor shall not make a new will, the contract revoked the outright absolute ownership of the jointly held property which normally would come into existence by operation of law on the death of the first spouse. The jointly held property was to be disposed of on the death of the surviving spouse pursuant to the terms of the will. It follows that since all property including that jointly held passes under the will, the surviving spouse receives only the use of the jointly held property during her lifetime without power to make a valid different testamentary disposition. Thus this interest would not be indefeasibly vested so as to qualify it for an exemption. The appeal is overruled and the pro forma order is affirmed.

Stephen Bilkis & Associates, with offices throughout New York, has its seasoned lawyers who deals with cases involving estate litigation, estate administration, and those involving probate. Its Kings County Will Contest Lawyers, or its New York Estate Attorneys, will ensure that you are accorded due process throughout the proceeding.

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