Allen v. First Nat. Bank of Madison (In re Allen's Estate)
| Citation | 9 N.W.2d 102,243 Wis. 44 |
| Parties | In re ALLEN'S ESTATE. ALLEN et al. v. FIRST NAT. BANK OF MADISON et al. |
| Decision Date | 13 April 1943 |
| Court | United States State Supreme Court of Wisconsin |
OPINION TEXT STARTS HERE
Appeal from an order of the County Court of Dane County; Fred M. Evans, Judge.
Proceeding in the matter of the estate of Katharine Allen, deceased, by Andrews Allen and others against First National Bank of Madison, Wis., as executor, and others. From an order redetermining the portion of inheritance taxes chargeable to the share to be distributed to Elizabeth E. Allen, as life tenant, and otherwise, and the portions chargeable to the shares of other legatees, including Andrews Allen and Katharine E. Allen, minors, W. Wade Boardman, as guardian ad litem of such minors, appeals.-[By Editorial Staff.]
Affirmed.
In proceedings in the administration of the estate of Katharine Allen, deceased, under her will, the court redetermined by an order made on July 28, 1942, the portion of inheritance taxes chargeable to the share to be distributed to Elizabeth E. Allen, as a life tenant, and otherwise, and also the portions chargeable to the shares of other legatees, including Andrews Allen and Katharine E. Allen, who were minors. On their behalf W. Wade Boardman, as guardian ad litem, appealed from the order.
W. Wade Boardman, of Madison (Roberts, Roe & Boardman, of Madison, of counsel), for appellant.
Stroud, Stebbins & Wingert and Neil Conway, Inheritance Tax Counsel, both of Madison, and John E. Martin, Atty. Gen., and Harold H. Persons, Asst. Atty. Gen., for respondents.
No question is raised on this appeal as to the total amount of inheritance taxes payable in the estate under Ch. 72, Stats., to the state of Wisconsin. Appellants contend that the order of July 28, 1942, is erroneous in so far as the court thereby determined the incidence and method of payment of the taxes. By her will and codicils Katharine Allen bequeathed to Elizabeth E. Allen a legacy of $20,000, certain personal property, the cancellation of her indebtedness to the testatrix; and in relation to the residue of her property, after payment of several other specific legacies, etc., a trust was created, the net income of the corpus whereof was to be paid to Elizabeth E. Allen during her life; and thereafter the corpus was to be distributed to testatrix' nephews and a niece, including the appellants Andrews Allen and Katharine E. Allen. In an order dated September 8, 1941, the court's findings in relation to the respective distributive shares of the legatees and “the amount of tax due from each” provided in part:
+------------------------------------------------+
¦ ¦Distributive Share¦Taxes ¦
+------------------+------------------+----------¦
¦Elizabeth E. Allen¦$100,225.42 ¦$19,543.95¦
+------------------+------------------+----------¦
¦Katharine E. Allen¦14,947.19 ¦336.62 ¦
+------------------+------------------+----------¦
¦Andrews Allen ¦15,004.51 ¦338.12 ¦
+------------------------------------------------+
On a rehearing granted on the petition of Elizabeth E. Allen, the parties stipulated, in substance (so far as here material), that the values of Elizabeth E. Allen's legacies are: Life interest in trust estate, $65,866.70; specific cash legacy and other bequests, $34,358.72; making a total of $100,225.42; and that on the $65,866.70 valued life interest the total inheritance tax would be $12,708.80 (computed as if it was the only legacy she was receiving; and without admitting the propriety or legality of the use of such computation). In respect to that tax of $12,708.80, Elizabeth E. Allen contended that under sec. 72.15 (5), Stats., it should be paid and deducted from the corpus of the trust, and not from her legacy of $20,000; and that from the latter there can be deducted by the executors only such taxes as are assessable and paid on her distributive share, other than the life estate under the will. The court sustained these contentions and ordered: “That the inheritance tax due and chargeable against” Elizabeth E. Allen, “should be prorated according to the respective amounts of the various bequests, and the value of her beneficial interest in the trust, and that the tax be paid accordingly; that which is chargeable against her beneficial interest in the trust estate to be deducted from the corpus.”
That order determining the incidence and method of payment of the tax in question must be sustained. The statutory provisions applicable, for the purpose of inheritance taxation, to the determination of the value of the property constituting the corpus of the trust, the respective interests therein of the life tenant and of the remaindermen, and the incidence and method of payment of the taxes imposed, are the following provisions in sec. 72.15, Stats.:
It is undisputed that the court rightly determined, in accordance with those provisions, the value of the respective estates or interests in the corpus of the trust which were transferred under the will and the amounts of the taxes imposed upon the transfer of each estate or interest. But appellants contend that the state inheritance taxes are imposed upon the privilege of receiving an inheritance or legacy and the burden thereof is upon the recipient; that the taxes imposed on account of a life estate are no exception to the rule, and should be borne by the beneficiary of such estate; and that therefore the taxes on the value of Elizabeth E. Allen's beneficial interest in the corpus of the trust property and chargeable against such interest should be borne by her, as the beneficiary thereof, and should not be deducted from the corpus. Appellants claim that the problem as to upon whom there shall be imposed the burden of such taxes upon the transfer of a vested life, or future limited, estate has not been decided by this court in a contest on that question. Appellants cite State ex rel. Kempsmith v. Widule, 161 Wis. 389, 154 N.W. 695, in which the facts show with respect to an annuity, that “In due course, the bequest was valued under the inheritance tax law of the state, the prescribed inheritance tax was assessed thereon, and was paid by or on account of the beneficiary.” And, on the other hand appellants cite Miller v. Douglass, 192 Wis. 486, 507, 213 N.W. 320, 327, in which this court, after noting that the trial court held that inheritance taxes on testamentary life estates were payable out of the corpus of the trust, said, “The correctness of this holding is not challenged by any of the counsel in this case and it appears to be the law, as is shown by the following cases cited in the brief of respondents' counsel: People v. Lowenstein, 284 Ill. 126, 119 N.E. 917;Matter of Tracy, 179 N.Y. 501...
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