The opinion of the court was delivered by: Small
The Director of the Division of Taxation (Director) seeks to hold Harry J. Coleman, Esq., executor of the Estate of Ruth Satchwell, deceased, personally liable for transfer inheritance tax (N.J.S.A. 54:33-1 to -36-7) due from the Estate of Hubert Satchwell, deceased.
Hubert Satchwell died intestate on May 20, 1990. Ruth Satchwell, his sister, was the sole heir of Hubert Satchwell. At his death, Hubert Satchwell had several bank accounts with the Howard Savings Bank. In order to gain their release Ruth Satchwell filed two Affidavits of Waiver (Form L-8) with the bank. One affidavit dated June 25, 1990, lists six accounts and lists Ms. Satchwell as the decedent's "sister" although the term "spouse" is crossed out. *fn1 The other affidavit dated September 12, 1990, lists only two accounts and lists Ms. Satchwell as the decedent's "spouse."
The tax, which is not in dispute, relates to the four accounts which were held in the joint names of Hubert and Ruth Satchwell and listed on the June 25, 1990, Affidavit of Waiver and not on the September 12, 1990, Affidavit of Waiver.
On November 19, 1990, Harry J. Coleman, Esq., as attorney for Ruth Satchwell, sole heir of Hubert Satchwell, deceased, filed a Transfer Inheritance Tax Affidavit (Form L-3) for the Estate of Hubert Satchwell. This form L-3 failed to list the four joint accounts. The record does not indicate that Mr. Coleman knew of these accounts at the time he prepared the L-3 for Hubert Satchwell's estate, nor does it indicate whether he was aware of the errors on the L-8's, listing Ms. Satchwell as Hubert's "spouse".
Ruth Satchwell died testate on December 30, 1990. Her will named Harry J. Coleman, Esq., as executor.
On January 14, 1991, the Monmouth County Surrogate, on application of the executor, Harry J. Coleman, entered an Order Limiting Creditors (N.J.S.A. 3B:22-4) in the Estate of Ruth Satchwell. Harry J. Coleman, Esq., administered the Estate of Ruth Satchwell, drew his executor's commission and attorney's fee and, in accordance with Ms. Satchwell's will, distributed all of the estate's assets to two non-resident individuals.
On September 26, 1994, a bill for the tax relating to the four joint bank accounts properly taxable in the Estate of Hubert Satchwell was sent to Ruth Satchwell, care of Harry J. Coleman, Esq., the attorney whose name appeared on the Transfer Inheritance Tax Affidavit filed for Ruth Satchwell in her capacity as heir of the estate of Hubert Satchwell. Mr. Coleman responded to that letter on October 18 and November 8, 1994. On December 29, 1994, the Division wrote to Mr. Coleman, indicating that the September 26, 1994, bill remained unpaid and that "the personal representative of the estate is made personally liable for the payment of tax and interest."
Plaintiff filed a complaint with this court seeking review of the December 29, 1994, "assessment" against Harry J. Coleman. Both parties have moved for summary judgment. R. 4:46-2.
The parties agree that $3,731.94 plus applicable penalties and interest is due to the Director with respect to the Estate of Hubert Satchwell. They agree that Ruth Satchwell as manager and beneficiary of Hubert Satchwell's estate was personally liable for those taxes. They agree that on Ruth's death her estate became liable for those taxes. They agree that on the distribution of Ruth's estate her beneficiaries became liable for those taxes. They agree that her estate remains liable for the payment of those taxes. The only dispute relates to whether plaintiff, Harry J. Coleman, may be held personally liable for that tax.
It is clear that there were mistakes made in the administration of the Estate of Hubert Satchwell. Assets were released on the basis of affidavits which may have misidentified the relationship of Ruth Satchwell to the decedent. Assets which should have been listed on the Transfer Inheritance Tax Affidavit (L-3) were not. Nevertheless, the nature of those mistakes and the identification of the persons responsible are not essential to a determination of the motions in this case. Under our Supreme Court's most recent enunciation of the standards for granting summary judgment, this case is ready for determination. Brill v. Guardian Life Insurance Co. 142 N.J. 520 (1995).
The issue to be determined is whether Harry J. Coleman, Esq., the executor of the Estate of Ruth Satchwell, deceased, is personally liable for the transfer inheritance tax obligation of Ruth Satchwell which arose out of her role as sole heir and "manager" of the estate of her late brother, Hubert Satchwell.
For the reasons expressed below, I have concluded that Harry J. Coleman, as executor of the Estate of Ruth Satchwell is not personally liable for the debts of the Estate of Hubert Satchwell or for Ruth Satchwell's personal debts, which did not become known as a debt of her Estate until more than three years after the issuance of an Order Limiting Creditors of her estate and after the distribution of all of her estate's assets.
Beneficiaries of New Jersey estates are liable for the transfer inheritance tax attributable to their inheritance. Gould v. Director. Div. of Taxation, 2 N.J. Tax 316, 319-20 (Tax 1981). Fiduciaries of New Jersey estates are personally liable for the transfer inheritance tax. Id. at 320. N.J.S.A. 54:35-2 provides:
Executors, administrators, trustees, grantees, donees or vendees shall be personally liable for any and all such taxes until paid as hereinafter directed, for which an action at law ...