Majority
p. 134In the Matter of the Estate of Laura S. Johnson, Deceased. (Surrogates Court, Kings County, Filed July, 1887.)
Headnote
'Collateral inheritance tax—Tax on estate of remainderman should BE TAKEN OUT OF PRINCIPAL.Where the estate given to a remainderman is taxable under the collateral inheritance tax law, the tax is payable out of the principal, although the interest of the living beneficiary is not taxable under said law.
Motion to confirm report of appraiser appointed in a proceeding instituted under collateral inheritance tax act.
The objections made were:
First. That as there was no machinery provided whereby it would be safe for the executor to pay the tax, the law being inapplicable and inopertative in respect to an estate created by the will.
Second. That the will provided, “ I give and bequeath to my nephew, J., $2,000 in trust to invest, and pay the income to his mother, M., during her natural life, or until she shall remarry, and, upon her death or remarriage, I give and bequeath the same absolutely in equal shares to the said J. and my grand-niece B.
Third. That it was impossible to compute the value of the estate given to the mother, because the period was un
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certain, it being for her natural life or while she remained unmarried.
Fourth. That if the assessed tax was paid out of the principal, it would thereby diminish the income which M. was entitled to enjoy.
Fifth. The residue was, by the will, given to the executor in trust for the benefit of the brothers of decedent and' their wives for life, with remainder to nephews and nieces. The life estate was not found to be taxable by the appraiser, but he assessed tax on the remainder, thereby diminishing the amount which the fife beneficiary would enjoy the income of, by the amount of the remaindermen’s taxes.
Sixth. That the report should not be confirmed.
Oliver S. Ackley, for executor, opposed.
The appraiser’s report is confirmed. I do not see that the objections made have any force. The principal objection is that the remainders would be diminished by the payment of the tax on the life estate out' of the capital.
The answér to this is that the tax on the life estate may and ought to be taken out of the income. The objection that the tax on the remainder will reduce the capital and so affect the income is not, I think, tenable, as long as it is lawfully so reduced. There is no other mode of ascertaining the value of the life estate than that adopted by the appraiser.