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Probate Court Decides Tax Issue


New York Probate Lawyers said the decedent died a resident of Nassau County and left a will. The will was admitted to probate by decree of the court and letters testamentary were issued to one of the decedent’s daughters. The decedent was also survived by another daughter.

A New York Will Lawyer said the decedent directed that all taxes and duties of any nature which may be assessed or imposed, either by the United States, the State of New York, or by any other jurisdiction, upon or with respect to property passing under the provisions of the Will or upon or with respect to property not passing under the provisions of the Will but upon which property such taxes are assessed or imposed, including all such taxes assessed or imposed upon the proceeds of any policies of insurance upon her life, be paid out of her residuary estate. Unless her residuary estate is insufficient to pay the taxes in full, no claim shall be made by her Executors for a contribution toward the payment of taxes against any beneficiary of this Will, other than the residuary beneficiary, or against any person who, by reason of her death, receives property outside the Will, or against any person who receives the proceeds of life insurance contracts.

Bronx Probate Lawyers said the executor has filed an account of her proceedings. The decedent’s daughter and niece have filed objections to the account. The objectants object to the Statement of Interested Parties, because they contend that one of the daughters is not a 50% residuary beneficiary as described therein but instead the sole residuary beneficiary. The objectants claim that the dispositions are pre-residuary legacies and not part of the residuary estate. The objectants also object to the manner in which the executor has allocated estate taxes. The objectants argue that the estate taxes should be borne entirely by one of the daughters since she is the sole residuary beneficiary under the Will.

Specifically, Brooklyn Probate Lawyers said the objectants argue that the will contains a clear direction that estate taxes are to be paid out of the residuary estate, and that she is the sole residuary beneficiary of the estate. In support of their position, objections point out that the will contains the language “all the rest and residue of my estate, including all lapsed dispositions hereunder, to my daughter.” The objectants argue that the dispositions were intended merely as legacies and that only the disposition to the daughter constitutes the true residuary estate.

The executor opposes the motion for summary judgment and has cross-moved for summary judgment. Counsel for the executor affirms that he was the attorney/draftsman of the decedent’s will and knew the decedent for over thirty-five (35) years. The attorney/draftsman states that the objectants are taking a word or phrase in the will out of context and not looking at the will as a whole. In addition, counsel argues that the objectants’ contention that Paragraphs A, B and C of Article VI are legacies and only Paragraph D is the residuary is unavailing since the opening sentence of Article VI states in unequivocal terms that it is disposing of all of the rest of the estate, of whatsoever kind and wheresoever situated, including funds in checking and savings accounts, certificates of deposit and money market accounts in banks, not heretofore given.

Where the terms of the will are clear and unambiguous, however, a court is without power to change them. In addition, the court may not consider extrinsic evidence unless the parties can show that an ambiguity exists which cannot be resolved without resort to such evidence. If the terms of the will are clear and unambiguous, extrinsic evidence will not be admitted to contradict those terms.

The issue before the court is whether the disposition under Paragraph D of Article VI is the true disposition of the residuary estate and should be responsible for bearing the entire tax burden of the estate. The objectants do not dispute that Article X exonerates all non-testamentary bequests from the payment of estate tax in the event the residuary estate is not sufficient to satisfy the tax burden nor do they dispute that Article X is a clear direction against apportionment with respect to pre-residuary testamentary bequests.

The most commonly used and clearest words passing the general residue are “all the rest and residue of my property of every kind and description whatsoever and wheresoever situated,” since the word “residue” includes everything remaining after the payment of legacies, debts and expenses. It is not necessary that the exact words just mentioned be used, however, since the intention of the testator is the governing factor. Any language which indicates an intention to pass the residue is sufficient. Words in common usage such as “rest,” “residue,” or “remainder” are not indispensable to a residuary gift, and in various instances words and expressions, which are informal, have been given this effect in light of the testator’s obvious intention. There is no necessity for the use of formal words or expressions. In fact, a gift of the balance’ of an estate has been interpreted to describe the general residue in the estate. So likewise has the word surplus.

In some instances, such as here, there may be disagreement over which of multiple dispositions constitute the residuary clause. It is not uncommon for residuary clauses to contain multiple gifts, and in their ultimate paragraph to direct the disposition of the balance of the residuary estate. In such cases, the question arises whether the ultimate paragraph is the “true” residuary clause, or whether there is a “residuary within a residuary”. It is apparent that specified gifts of sums of money, or specific bequests are indicative of intent on the part of the testator to benefit the legatee only to the extent set forth. In these instances, it is clear that the testator would not have intended other, lapsed “residuary” bequests to vest in that legatee. This is so because the demonstrative bequest of a specific sum of money, even if set forth within the residuary clause, is contrary to the obvious purpose of a residuary estate to pass all property not otherwise disposed of. It may plausibly be argued that such a bequest is not part of the “true” residuary clause.

Since it is evident that the whole will, the relationships of the donees to the testatrix, and the financial consequences that the primary intra-residuary gifts were not intended to bear a tax burden, it is right that the testatrix’ intention be obeyed. In doing so, however, it is equally evident that a tax clause which requires looking to the whole will, the relationship of the donees, and the financial impact of the tax burden is not clear and unambiguous but literally to the contrary, at worst, or, at best, ambiguous.

The court agrees with the objectants that there is no need to resort to extrinsic evidence such as the decedent’s relationships with his daughters and his statements to the attorney-draftsman as the language of the will is clear. Therefore, it is not necessary to address the arguments raised by the objectants. The court, however, finds that the entire will clearly evidences the decedent’s intent to dispose of the remainder or rest of his estate. The words “rest” of the estate and “of whatsoever kind and wheresoever situated” in the preamble to Article VI evidence the decedent’s intent to dispose of the surplus of his estate therein. The use of percentages in Paragraphs A, B and C is also indicative of the decedent’ intent to dispose of the balance or rest of his estate in Article VI. Contrary to the objectants’ argument, there is no direction in the will that the dispositions in Paragraphs A, B and C are to be paid out of particular funds. The testator’s intention as gleaned from the “whole will be taken together and not from detached portions alone, together with all the parts construed in relation to each other forms a consistent whole”. Article VI in its entirety, not just Paragraph D, constitutes the true residuary estate under the decedent’s will.

When family members are not aware of a will, legal disputes are inevitable. To successfully overcome your will contest related proceeding, ask for the legal representation of the Nassau County Will Contest Lawyer or the Nassau County Probate Attorney from Stephen Bilkis and Associates. You can also hire the Nassau County Estate Lawyer if you are in need of one.

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