Pohlhaus v. Register of Wills for Baltimore City

Decision Date07 February 1968
Docket NumberNo. 67,67
Citation238 A.2d 91,248 Md. 625
PartiesWalter C. POHLHAUS and John R. Norris, Executors of the Estate of Henry F. Bremer et al. v. REGISTER OF WILLS FOR BALTIMORE CITY.
CourtMaryland Court of Appeals

J. M. Dryden Hall, Jr., Baltimore, (Baldwin, Jarman & Norris, Baltimore, on the brief), for appellants.

Thomas A. Garland, Asst. Atty. Gen., (Francis B. Burch, Atty. Gen., Baltimore, on the brief), for appellee.

Before HAMMOND, C. J., and HORNEY, MARBURY, BARNES, FINAN and SINGLEY, JJ.

SINGLEY, Judge.

This case comes on appeal from the Orphans' Court of Baltimore City. The appellants are the executors of the will of Henry F. Bremer, who died on 3 October 1965, leaving a will dated 7 July 1964, which was admitted to probate on 19 October 1965. By the terms of his will, Bremer left the residue of his estate to the trustees of an inter vivos trust which the decedent had created by deed of trust dated 22 June 1956, as amended 7 July 1964.

The deed of trust provided that income was to be paid to Bremer for life; that on Bremer's death, survived by his widow, the trust estate in the hands of the trustees, including any assets received by the trust from Bremer's estate, was to be divided into two parts: one, a marital trust; the other a residuary trust. The deed also provided that the size of the marital trust and the assets to be allocated to it were to be determined in accordance with a formula designed to qualify the marital trust for the marital deduction permitted by Int.Rev.Code of 1954, 26 U.S.C. 2056. At the time of Bremer's death the trust estate had a value of some $823,000.

With commendable prudence, Bremer's executors determined to delay the administration of the estate passing through probate in order to avail themselves of the option permitted by Int.Rev.Code of 1954, 26 U.S.C. § 2032, which allowed them to choose the date of death or a date one year thereafter as the date on which the gross estate would be valued for federal estate tax purposes. Subsequent market conditions proved the executors to be right and made the optional valuation date the more advantageous for federal estate tax purposes.

It was this circumstance that caused the executors to become enmeshed in the Maryland tax statutes. The Maryland inheritance tax levied by Maryland Code (1965 Replacement Volume) Article 81, §§ 149-150 is a succession tax imposed on the right to receive property. State v. Dalrymple, 70 Md. 294, 17 A. 82, 3 L.R.A. 372 (1889); Good Samaritan Hospital v. Dugan, 146 Md. 374, 126 A. 85 (1924); Downes v. Safe Deposit & Trust Company, 164 Md. 293, 164 A. 874, 86 A.L.R. 1024 (1933). The Code sections which implement the imposition of the inheritance tax, Maryland Code (1965 Replacement Volume) Article 81, §§ 153, 167 and 169, are cast in the alternative. Property (other than real estate or money) subject to probate is to be appraised as provided by Section 153:

' § 153. Tax on appraised value of personal property; sale of property to pay tax; reappraisal.

When any species of property other than money or real estate shall be subject to said tax, the tax shall be paid on the appraised value thereof as shown in the inventory filed in the office of the register of wills of the proper county or city and every executor shall have power, under the order of the orphans' court, to sell, if necessary, so much of said property as will enable him to pay said tax. At any time or times within fifteen months after the grant of letters of administration, but not thereafter, the orphans' court appointing the appraisers, upon petition of the register of wills or the executor, and for good cause shown, may direct the appraisers to reappraise and revalue the property included in the inventory and still in the hands of the executor, and return such reappraisement and revaluation in an amended inventory. In such event, the tax shall be paid on the reappraised value of such property other than money or real estate as shown in the amended inventory.'

Property not subject to probate is to be appraised in the manner provided by Section 169:

' § 169. Duties of trustees or other person making distribution where there is no formal administration; filing inventory-In general.

In all cases where estates or any interest therein pass, and there is no formal administration subject to the jurisdiction of any court, it shall be the duty of every trustee or other person making distribution of any property passing subject to the inheritance tax imposed by this subtitle, to file in the orphans' court of the county or city where the decedent had his or her residence at the time of his or her death, or in case of real estate, in the orphans' court of the county or city in which the real estate is situated, within ninety (90) days after the death of such person, a full and complete inventory of the property passing subject to the inheritance tax imposed by this subtitle and which said trustee or other person making distribution thereof is about to distribute; and in all such cases where any property passes subject to the taxes imposed by this subtitle, and there is no trustee or other person to make distribution thereof, it shall be the duty of the person receiving such estate or any interest therein, to file the inventory within the time and in the manner hereinabove provided. Upon the filing of the inventory as required by this section, the orphans' court shall appoint at least two appraisers to value the property listed in any such inventory for the purpose of determining the amount of tax due and payable hereunder; and the tax so ascertained to be due shall become payable at once to the register of wills, for the nonpayment of which he is authorized to institute suit for and on behalf of the State of Maryland in any court of competent jurisdiction.'

Section 167 provides for the appraisal of real estate and for the administration of property where no administration has been commenced.

The legislative history of Section 153 indicates that prior to 1958 the interpretation given to Section 153 by this Court and by the Attorney General was that for inheritance tax purposes personal property was to be valued as of the date of distribution and not as of the date of death. This section was amended by Chapter 36 of the Laws of 1958 so as to require date of death valuation. As so amended Section 153 also permits a reappraisal of personal property at any time within 15 months of the grant of letters upon petition for cause...

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5 cases
  • Mercantile-Safe Deposit & Trust Co. v. Register of Wills of Baltimore City, MERCANTILE-SAFE
    • United States
    • Maryland Court of Appeals
    • 2 Abril 1970
    ...filed. The original complaint in our case had been prepared and filed before counsel for the trustee had read and analyzed the effect of the Pohlhaus case. Up until that time it ha(d) been assumed that Section 169 was not applicable; and that Section 161 (in its prior state) could therefore......
  • Mercantile-Safe Deposit & Trust Co. v. State ex rel. Shaughnessy
    • United States
    • Maryland Court of Appeals
    • 10 Febrero 1972
    ...to collaterals on the death of Alexius McGlannan, III. In an effort to avoid this, it relies on our decision in Pohlhaus v. Register of Wills, 248 Md. 625, 238 A.2d 91 (1968) in support of an argument that § 161 is not applicable to an estate appraised under Art. 81, § 169 (formerly Art. 81......
  • Maryland Cas. Co. v. Insurance Co. of North America
    • United States
    • Maryland Court of Appeals
    • 13 Febrero 1968
    ... ... Grimm, 200 Md. 461, 90 A.2d 180; Mayor and City Council of Baltimore v. Schwind, 175 Md. 60, 199 A. 853 ... ...
  • Mercantile-Safe Deposit & Trust Co. v. Register of Wills for Baltimore City
    • United States
    • Maryland Court of Appeals
    • 6 Febrero 1969
    ...Code, (1957, 1965 Repl.Vol.), Art. 81, §§ 149, 150 is a succession tax imposed on the right to receive property, Pohlhaus v. Register of Wills, 248 Md. 625, 238 A.2d 91 (1968); Downes v. Safe Deposit & Trust Co., 164 Md. 293, 164 A. 874, 86 A.L.R. 1024 (1933); Good Samaritan Hospital v. Dug......
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