Ewart, Grimshaw and Pindar. The opinion of the court was delivered by Ewart, J.s.c. (temporarily assigned).
Pursuant to the provisions of R.R. 4:88-8 (see also R.S. 54:33-2), the executors under the last will and testament of Jessie L. Hopkins, deceased, appeal from the final determination of the Transfer Inheritance Tax Bureau of the Division of Taxation in the Department of the Treasury assessing transfer inheritance tax upon the value of certain legacies and devises passing by the will of Jessie L. Hopkins to nine so-called step-grandchildren, they being the children of the three stepchildren of decedent, at the rate of 8% under the provisions of R.S. 54:34-2(d).
Appellants contend that the so-called step-grandchildren should be accorded the same preferential treatment given to natural grandchildren of a decedent by R.S. 54:34-2(a), which latter section grants an exemption of $5,000 and taxes the next $45,000 at the rate of 1%.
The sum of approximately $15,000 of taxes is involved in this controversy.
The facts are not in dispute.
Jessie L. Hopkins died testate a resident of Upper Montclair on December 15, 1954. Her will was duly probated December 30, 1954 and letters testamentary were issued to appellants by the Surrogate of Essex. By her will her residuary estate is bequeathed and devised in trust, in equal shares, to the children of her three stepchildren.
Harold R. Hopkins, Marian H. McDonald and Donald B. Hopkins, the appealing executors, are the three stepchildren of the testatrix. There are nine children of the three stepchildren, viz. , Richmond B. Hopkins, Barbara H.
Stratton, John Alden Hopkins, Marion Ida McD. Dodd, Dorothy McDonald, Margaret Seaman McDonald, Carol Hopkins Brown, Nathaniel R. Hopkins, 2d, and Marjorie B. Hopkins.
The Inheritance Tax Bureau determined that these so-called step-grandchildren of testatrix did not fall within the category of near relatives entitled to preferential treatment in the imposition or assessment of inheritance tax as provided in R.S. 54:34-2(a), but that they were subject to tax at the rate of 8% under the provisions of R.S. 54:34-2(d).
Generally, appellants contend that the stepchild of a decedent is a child of the decedent within the meaning of the transfer inheritance tax statutes (R.S. 54:34-2 and 54:34-2.1) and that transfers of property passing to the issue of such stepchildren should be taxed at the rates and with the exemptions provided in R.S. 54:34-2(a) with respect to the issue of natural children of a decedent; that by the enactment of L. 1937, c. 128 (R.S. 54:34-2.1), as a supplement to the original Inheritance Tax Act, the Legislature did not intend to establish a new and separate category of transferees but rather intended to recognize and treat stepchildren of a decedent as members of decedent's immediate family entitled to the most preferential treatment with respect to exemptions and rate of taxation under the four categories or classes already established by the statute, R.S. 54:34-2; that the purpose of the 1937 statute was to treat stepchildren the same as natural children for inheritance tax purposes; and that if stepchildren are to be treated the same as natural children, then it is logical to presume that the issue of stepchildren should be considered the same as issue of the natural child of a decedent, and so, the appellants reason, there was no need for the Legislature to make specific mention of the issue of stepchildren in enacting the 1937 statute.
Appellants cite no New Jersey cases on this point and concede that there are no specific New Jersey cases dealing with the point involved in ...