In re Warden's Estate — 157 N.Y.S. 1111

Majority

p. 1111

In re WARDEN'S ESTATE.

(Surrogate’s Court, New York County.

March 27, 1916.)

Headnote

1. Taxation @=878(2)—-Transfer Tax—Appointment.

Under Tax Law (Consol. Laws, e. 60) § 220, subd. 6, providing that, when any person shall exercise a power of appointment, it shall be deemed a transfer taxable in the same manner as though the property to which the appointment relates were the absolute property of the donee of the power, property situated within the state, to be passed by virtue of appointment by the donee of the power, is taxable, though his power of appointment was conditioned on the death of a life tenant without issue and the life tenant outlived the donee, since the appointment became absolute imme

<Sc^For other cases see same topic & KEY-NUMBER, in all Key-Numbered Digests & Indexes

p. 1112

diately upon the death of the life tenant without issue, and the property then was transferred under the appointment.

[Ed. Note.—For other cases, see Taxation, Dec. Dig. <@=>878(2).]

2. Taxation <@=>897—Transfer Tax—Appointment—Life Estate.

Where a testator was given a surviving life estate in a certain trust fund, with power to appoint the remainder, and died during the life of the holder of the previous life estate, having exercised his power, the value of his life estate should be deducted from the value of the property subject to the power in determining the transfer tax.

[Ed. Note.—For other cases, see Taxation, Dec. Dig. <§=>897.]

<gs»For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Proceeding for assessment of transfer tax due from the estate of Clarence Warden, deceased. From an order of the appraiser, assessing the tax on certain property, the recipient thereof appeals. Order reversed, and report remitted to appraiser to make certain taxations.

Cadwalader, Wickersham & Taft, of New York City (Francis Smyth and Laurence Millet, both of New York City, of counsel), for appellant..

Charles T. Kunlcel, of Brooklyn, for state comptroller.

The appointee of certain property transferred by virtue of the exercise of a power of appointment by the decedent herein has appealed from the order assessing a tax upon the value of said property and contends that it is not subject to a transfer tax in this state.

William D. Warden died in 1895, leaving a will by which he gave to Clarence Warden, the decedent herein, a surviving life estate in one-half of a certain trust fund bequeathed to Juliet P. R. Carington for life. He also gave to the decedent the power to appoint the remainder after his surviving life estate in the trust fund. The decedent herein died in 1907, and Juliet P. R. Carington died in 1913. The decedent made a will in which he exercised the power of appointment given to him under the will of William D. Warden. By virtue of the exercise of that power certain property, consisting of bonds and mortgages on real estate in this state, was transferred to William F. Warden, the appellant herein. The value of the property transferred was ascertained by the appraiser to be the sum of $24,655. William D. Warden, the donor of the power, had his domicile in the Kingdom of Great Britain and Ireland, and the trustees under his will were nonresidents of this state. The decedent, Clarence Warden, had his domicile in the state of Maine. The affidavit filed with the appraiser on behalf of the estate alleged that -the only property within 'the state of New York held by the trustees under the will of William D. Warden for the benefit of Juliet P. R. Carington at the date of decedent’s death-consisted of bonds and mortgages on New York real estate.- It is not specifically alleged that the bonds were physically located within ¡this state, but this material fact is conceded in the brief of the attorneys for the estate.

' EH The question presented for determination, therefore, is whether the transfer of such bonds and mortgages,-by virtue of the power of

p. 1113

appointment exercised by the decedent, is subject to a transfer tax. The appellant contends that the decedent, when he exercised the power of appointment given to him in the will of William D. Warden, transferred only a chose in action, and as the decedent was a nonresident such a chose in action had its situs in the state in which he had his domicile. While it is true that the decedent at the time of his death was not entitled to any specific part of the property held in trust for the benefit of Juliet P. R. Carington, he had the right to appoint that property if she died without issue. As she left no issue, the power of appointment given to the decedent became absolute immediately upon her death, and the property constituting the trust fund was then transferred to the appointee by virtue of the power of appointment exercised by the decedent.

Subdivision 6 of section 220 of the Tax Law provides that when any person shall exercise a power of appointment it shall be deemed a transfer taxable in the same manner as though the property to which the appointment relates belonged absolutely to the donee of the power. The decedent herein exercised the power, and the property which was actually transferred by the exercise of the power was the bonds and mortgages located in this state. Such property, therefore, is to be regarded as the property of the decedent for the purposes of the Transfer Tax Law, and is subject to taxation under the provisions of that law in force at the date of decedent’s death. It is true that the particular property mentioned in the appraiser’s report was not transferred at the date of decedent’s death, because the power was not absolute at that time; but as soon as the event upon which the power was limited took place, the exercise of the power by the decedent became effective and the property passed under it to the appointee.

[2] The facts in this case are practically the same as those m the Matter of Wright, 214 N. Y. 714 , 108 N. E. 1112 . In that matter this court held that the property passing by virtue of the power of appointment, and which consisted of stocks of domestic corporations, was subject to a tax in this state. The Court of Appeals affirmed that decision, except as to the deduction of the life estate of the donee of the power. Upon the authority of that case I will hold that the bonds and mortgages which were located in this state, and which were transferred to the appointee by virtue of the power of appointment exercised by the decedent, are subject to a transfer tax under the Tax Law of this state. The appraiser, however, should have deducted from the value of such bonds and mortgages the value of the life estate of Juliet P. R. Carrington. Matter of Wright, supra.

The order fixing tax will be reversed, and the appraiser’s report remitted to him for the purpose of deducting the value of Juliet P. R. Carrington’s life interest in the value of the bonds and mortgages subject to a tax in this state. Settle order on notice.

Cases cited

In re the Transfer Tax upon the Estate of Wright 214 N. Y. 714 N.Y. 1915-04-27 p. 1113