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Court Decides Payment of Estate Taxes


A woman died and was survived by her five children. Her will, dated September 1, 2006 was admitted for probate on July 2, 2010 and letters of estate administration was issued to one of her children. The Will established a credit shelter trust for her husband, with remainder to her children. It left the rest, residue and remainder of her estate to her husband outright. Her husband predeceased her and she provided in the Will that if her husband predeceased her, she will left all the rest, residue and remainder of her properties, real, personal and mixed and wherever situated to her elder daughter. All the rest and remainder are to be equally divided among her children.

A New York Probate Lawyer said the estate is sufficiently large to generate a New York State estate tax. The will provides that all estate, inheritance, transfer, succession or other similar taxes shall be payable out of the residuary of the estate. The executor asks that the Court construe the gift to real property as a pre-residuary gift and the remainder clause of the Will as the residuary estate. The executor brings the construction proceeding, since he claims that not all of the residuary beneficiaries agree with his interpretation.

The Will in question directs that the payment of estate taxes be paid from the residuary estate. The Will contest claims that the Will contains two residuary clauses. Westchester County Probate Lawyer said the executor asks the Court to construe one of the residuary clauses as the true residuary estate. The effect will be that all estate taxes will be apportioned among the beneficiaries of the residuary clause and the devise of real property under the other residuary clause will pass to the devisee free of New York estate taxes. No objections have been filed to the petition for a construction, although the executor states that not all of his siblings agree with his interpretation.

The executor treats the matter as purely one of construction. He alleges that the residuary estate, to which tax exoneration provision of the Will applies, is not clear. In construing a will, the Court looks first at whether the will’s provisions are clear. INassau County Probate Lawyer said if there is no ambiguity, the court should interpret the will in accordance with the testator’s intent as expressed in the will. If there is an ambiguity, the Court should take extrinsic evidence of the deceased woman’s intention.

However, construction of a tax apportionment clause cannot be made without considering the special rules governing the State’s apportionment statute. The question of allocation should not be approached as would a construction question where at all events the meaning of the text must be determined from the content of the will. In a tax allocation problem, the text of the will is to be scanned only to see if there is clear direction not to apportion; and if such explicit direction is not found, construction of text ceases because the statute states the rule.

The Estates Powers and Trusts Law (ETPL) provides that whenever it appears that a fiduciary may be required to pay an estate tax with respect to property included in the gross estate, the amount of the tax, except in a case where the testator otherwise directs in her will shall be equitably apportioned among the persons to whom the property is disposed of in accordance with the rules of apportionment set forth, and the persons benefited shall contribute the amounts apportioned against them. ETPL provides that unless otherwise provided in the will or non-testamentary instrument, apportioned among the beneficiaries, in proportion to the benefit received.

Accordingly, the courts have applied a rule of strict construction where exoneration from apportionment is alleged. In case of doubt as to what the will means on the subject of taxes the statutory direction to apportion is absolute.

When the will directs payment of federal and State estate taxes out of the residuary estate, taxes are to be apportioned among the residuary beneficiaries unless there is a clear direction against apportionment.

The testator clearly provided for the disposition of her residuary estate after creating a marital trust for her husband in the event that her husband survived her. Finally, the effect of finding that the residuary estate is created would be to relieve the child receiving the real property from the obligation to share in the estate taxes imposed on the value of the devise. While the testator left her daughter a specific devise out of the residuary estate, there is no indication that the testator also intended to exonerate the specific devise from its share of the estate taxes imposed as a result of the gift. Accordingly, the estate taxes imposed must be apportioned among the residuary beneficiaries, including the devisee of the real property, according to the value of their residuary bequests.

Inheritance are not just about accepting what was given to you, it comes with obligations and responsibilities. Lawyers’ fees and taxes will surely take a big chunk of your bequest. If you need a Kings County Probate Attorney or a Kings County Will Contest Lawyer, you may call the office of Stephen Bilkis and Associates during office hours. You can also avail of the services of a Kings County Estate Attorney or a Kings County Estate Administration Lawyer to help you.


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