Dexter v. Jackson
| Decision Date | 25 May 1923 |
| Citation | 245 Mass. 333,140 N.E. 267 |
| Parties | DEXTER et al. v. JACKSON et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Probate Court, Suffolk County; Robert Grant, Judge.
Proceeding by Philip Dexter and others, as executors and trustees under the will of Louise S. Canda, against Rossiter C. Jackson and others, for instructions as to their duties. From a decree of the probate court, certain parties appeal. Affirmed.
Day Kimball, of Boston, for appellants.
R. S. Wilkins, of Boston, for respondents.
Oliver Wolcott, of Boston, for guardian ad litem.
This is a petition for instructions by the executors and trustees under the will of Louise S. Canda, to determine to what extent, if any, payments for Massachusetts legacy or inheritance taxes, the federal estate tax, charges for legal services and other expenses of administration, should be apportioned to the residue of the testatrix's individual estate, and to two trust funds over which she had and exercised a general power of appointment.
Mrs. Canda left a will, dated January 12, 1906, and two codicils, dated respectively November 14, 1911, and August 7, 1918. Besides her own individual estate she had a general power of appointment by will over two trust funds: One created by the will of her father, Charles T. Hubbard, and herein called the ‘Hubbard trust’; the other created by her grandfather, Benjamin Sewall, and herein called the ‘Sewall trust.’ By her will she appointed certain legacies of specific sums out of the Hubbard trust, and then provided in article seventh:
‘I direct that no deduction shall be made from any of the foregoing legacies on account of any legacy, inheritance or succession tax or taxes, whether the same be imposed by the United States or by any of the states, and that each of such legacies shall be paid in full.’
By article eighth the testatrix appointed from the Sewall trust:
‘To my executors hereinafter named a sum sufficient to supply the deficiency, if any there be, in the amount held for my benefit under the said will of my late father to enable them to pay in full and without any deduction all of the foregoing legacies.’
By article ninth she appointed all the rest and residue of the Hubbard and Sewall trusts in trust for the benefit of her two children for life, with a general power of appointment by will, and a gift in default of appointment. Article tenth gave the residue of her property, other than that comprised in said two trust funds, to her husband.
The testatrix gave certain bequests by her first codicil, and then provided:
* * *’ The second codicil, which was executed after the enactment of the federal estate tax, made certain bequests, and provided:
The individual estate of the testatrix consisted of personal property valued at $104, 921.61. From the Hubbard trust the petitioners received $49,459.95. As a result of legal proceedings instituted by them in the state of New York, no inheritance tax was levied by that state on any of the legacies appointed from that trust; nor has any tax been imposed on the property received from said Hubbard trust. The petitioners have received from the Sewall trust appointed property valued at $413,853.36, and have paid the only legacy or heritance tax assessed by any state thereon, namely, one imposed by this commonwealth on certain interests in Massachusetts real estate held under the Sewall trust. A federal estate tax was imposed under the United States revenue Act of 1918 (40 U. S. Stat. at Large, 1096 [U. S. Comp. St. Ann. Supp. 1919, §§ 6336 3/4a-6336 3/4k]) upon all property passing by the will of Mrs. Canda, including all property appointed from the Hubbard and Sewall trusts. The plaintiffs have paid this tax, amounting to $15,173.04.
It is conceded by all parties that the Massachusetts inheritance tax, assessed on the value of the remainder interests in the trust created by article ninth of the will, should be paid from the principal of said trust fund, in accordance with the decree of the probate court.
The federal estate tax is a tax on the net estate transferred by death, and not on the particular devises, legacies or distributive shares. It is an excise on the privilege exercised by the testatrix of passing property by will, not on the privilege of taking by the legatees. It must be paid out of the residue of the estate unless there be a testamentary expression of intention to the contrary. Plunkett...
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