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Matter of Estate of Berman

Decided: February 17, 1958.

IN THE MATTER OF THE ESTATE OF VICTOR H. BERMAN, DECEASED


Complaint for instructions.

Duffy, J.c.c.

Duffy

In this action plaintiffs-executors seek instruction as to whether decedent's will requires the apportionment of federal estate taxes among transferees of property included in the gross taxable estate, but not passing under the will. Plaintiffs urge that the will contains a direction of non-apportionment, bringing it within the exceptions set forth in N.J.S. 3 A:25-30 through 38, inclusive. The guardian ad litem , appointed to represent the decedent's two grandchildren in this proceeding, takes the position that the aforesaid non-testamentary transfers are not excepted from the aforesaid statute requiring apportionment.

Decedent died in 1953 leaving a gross federal estate of more than $2,000,000. His last will, executed July 25, 1948 and ratified by codicil July 19, 1951, after bequests to collateral kin amounting to $9,000, left the residue in trust, one-half to his widow for life and one-half in two equal parts to his two daughters for life. Approximately $300,000 of the gross federal estate represented inter vivos transfers to decedent's wife and daughters. The transfers, consisting of sundry items, including inter vivos trust indentures, savings bonds held jointly, life insurance proceeds, a house owned as tenants by the entirety, and gifts held by the taxing authorities to be in contemplation of death, occasioned a tax of $46,928.59 out of the total estate tax

of $277,327.47, after application of the marital deduction. It is of the former amount that the guardian ad litem contends reimbursement to the estate is required of the transferees.

Both parties agree that republication of the will in 1951 brought it within the effective date of N.J.S. 3 A:25-30 etc. , namely January 1, 1951. This statute requires apportionment in cases of taxed non-testamentary transfers "* * * except in a case where a testator otherwise directs in his will * * *." It also limits the operation of any direction as to apportionment or non-apportionment of tax to the property passing under a will or other instrument "unless such will or instrument otherwise directs."

The sole concern here is to determine whether the instant will "otherwise directs."

Paragraph Tenth of the will provided as follows:

"I direct that all estate, transfer, legacy and succession taxes of every kind which shall be imposed by the United States of America or any State thereof, or any country of the world or other political subdivision thereof, in respect of my property and estate disposed of by me whether under this my will or any other conveyance made by me, or in respect of the bequests and devises made by me under this, my Will, shall be paid out of my Residuary Estate after the trust for the benefit of my wife shall be set up as provided in paragraph Fifth of this Will as part of the expenses of the administration and settlement of my estate."

Extracting all the language of the paragraph pertinent to our inquiry it reads as follows:

"I direct that all * * * taxes * * * in respect of my property and estate disposed of by me, whether under this, my will or [under] any other conveyance made by me * * * shall be paid out of my Residuary Estate * * * as part of the expenses of the administration of my estate."

The guardian ad litem would restrict "any other conveyance" to a deed for real property. ...


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