On motion for payment of federal estate tax.
This is a motion by the plaintiff, Rafaella Brucato Green, the executrix of the estate of Lonsdale Green, Jr., deceased, to compel payment of the entire federal estate tax upon the said estate out of non-testamentary assets included in the estate for federal tax purposes.
Lonsdale Green, Jr., died on November 25, 1960, a resident of the Town of Westfield, Union County, New Jersey, leaving a last will and testament dated September 23, 1960, and a codicil dated October 6, 1960. These were admitted to probate by Eugene J. Kirk, Surrogate of Union County, on December 19, 1960.
Under the terms of the will as amended by the codicil, decedent left his entire estate to his widow, the plaintiff, with the exception of the sum of $5,000 given to her daughter by a prior marriage, and some furniture given to the nieces of his first wife.
Prior to his marriage to the plaintiff, Lonsdale Green, Jr. had been married to Ruth Streat Green, who died testate in 1954. Under the terms of her will she gave her said surviving husband, among other things, the income for life of a marital trust and a general power of appointment of the principal of said trust upon his death. She provided that the power of appointment be exercised by specific reference thereto in his will. In default of such appointment, she directed that the said principal be added to and merged with the principal of another trust, with income to her sister Emilie Streat Lewis for life, and then to her nieces Emilie
Lewis Bell and Margaret Lewis Smith for life, with remainder to the issue of her said nieces. Mrs. Bell has two children and Mrs. Smith has four children. Five of these children are minors. John A. Ackerman, Esquire, has been appointed guardian ad litem for the minors and for the unborn issue of the two nieces. He also represents the adult beneficiaries of the trust as their attorney, the interests of all of the beneficiaries being identical.
In an action between the parties in the Chancery Division of the Superior Court it has been adjudged that the power of appointment was not exercised by the decedent and that the above-mentioned beneficiaries are entitled to the trust assets as beneficiaries under the terms of the settlor's will.
The Chemical Bank New York Trust Company is the trustee of the trust.
Under section 2041 of the Internal Revenue Code (1954) the trust assets subject to the power of appointment are a part of the gross taxable estate of Lonsdale Green, Jr. even though he did not exercise the power of appointment. His will contains no provision with respect to taxes.
The executrix and the trustee have each calculated the figures to be included in the tax return and their figures differ. The following list shows some of the differences:
Gross estate $363,588.89 $366,353.72
Adjusted gross estate 322,805.07 326,506.79
Bequests to widow 141,586.02 126,880.91
Marital deduction 141,586.02 125,799.68
Net assets subject to appointm't 192,977.03 192,249.67
Taxable estate 121,219.05 140,707.11
The correct figures must be determined on final audit by the Internal Revenue Service. The executrix may deem it advisable to amend the return. However, for the purposes of this case it will be sufficient to note that the power of appointment added approximately $192,000 to a net estate
which would otherwise have been approximately $130,000. On the other hand, the marital deduction would have been approximately $65,000 without the additional assets instead of approximately $125,000 or $140,000 now calculated. In addition, a prior tax credit of $6,036.02 comes with the power of appointment.
The executrix contends that:
(1) The trustee must pay the entire tax without apportionment.
(2) The trustee must pay the amount shown on the tax return filed by the executrix, whether correct or not and ...