Siegel v. Comm'r of Internal Revenue (In re Estate of Siegel)

• Decision Date: 12 January 1977
• Docket Number: Docket No. 1481-74.
• Citation: 67 T.C. 662
• Parties: ESTATE OF DAVID A. SIEGEL, LEONARD J. SIEGEL, EXECUTOR, CHARLOTTE HELWEIL, EXECUTRIX, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

67 T.C. 662

ESTATE OF DAVID A. SIEGEL, LEONARD J. SIEGEL, EXECUTOR, CHARLOTTE HELWEIL, EXECUTRIX, PETITIONER

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 1481-74.

United States Tax Court

Filed January 12, 1977.

Decedent and his wife executed mutual wills containing certain language of a nature that would contractually bind them to dispose of their collective estate in a specified manner. Held: Under New York law, the independent contractual language contained in the wills created a contract which was binding upon the survivor. The interest received by the surviving spouse by virtue of the decedent's will was therefore terminable within the meaning of sec. 2056(b)(1), I.R.C. 1954, and fails to qualify for the martial deduction. Estate of Edward N. Opal, 54 T.C. 154 (1970), affd. 450 F.2d 1085 (2d Cir. 1971), followed. Barry D. Gordon, for the petitioner.

Walter C. Welsh, for the respondent.

FAY, Judge:

Respondent determined a deficiency of $26,048.38 in the Federal estate tax of the petitioner, the Estate of David A. Siegel. Due to concessions,¹ the sole issue remaining for decision is whether petitioner is entitled to a marital deduction under section 2056(a)² for the value of the interest in property which decedent's surviving spouse received by virtue of his will.

FINDINGS OF FACT

Certain facts were stipulated and are so found.

David A. Siegel (hereinafter referred to as David or the decedent) died testate in New York on September 9, 1970. He was survived by his wife, Mildred Siegel (hereinafter referred to as Mildred), his adult son, Leonard J. Siegel, and his adult daughter, Charlotte Helweil. Leonard resided at New York, N.Y., and Charlotte resided at Roslyn, N.Y., at the time of the filing of the petition herein, and they are the executor and executrix of the Estate of David A. Siegel.

On December 4, 1962, David and Mildred executed mutual wills before the same witnesses after approximately 38 years of marriage. Some of the pertinent provisions of the decedent's will are as follows:

I, DAVID A. SIEGEL, residing in Kings County, State of New York, do hereby revoke all Wills and Codicils, as well as all other instruments of a testamentary nature heretofore made by me, and do hereby make, publish and declare this to be my Last Will and Testament in manner and form following:

FIRST: I declare that I am a citizen of the United States of America and I further declare that I have adopted and acquired the County of Kings, State of New York, as my domicile.

THIRD: I hereby give, devise and bequeath to my beloved wife, MILDRED J. SIEGEL, all right, title and interest I may have in the home occupied by me as of the date of my death.

FOURTH: I hereby give, devise and bequeath to my beloved son, LEONARD SIEGEL any right, title and interest I may have in and to the business known as David A. Siegel Insurance, presently located at 55 Liberty Street, New York, New York.

FIFTH: I hereby give, devise and bequeath to my beloved wife, MILDRED J. SIEGEL, if she shall survive me, an amount equal to the maximum marital deduction allowable in determining the Federal Estate Tax payable by reason of my death, diminished by the value of all other property interests included in my gross estate for Federal Estate Tax purposes and which pass or have passed to my said wife, either under any other provision of this Will or in any other manner outside of this will, in such manner as to qualify for said marital deduction.

SIXTH: If my said wife and my said children LEONARD SIEGEL and CHARLOTTE STRAUBER or any issue of my said children shall survive me, I give, devise and bequeath all the rest, residue and remainder of my estate, to my said beloved children, share and share alike or if either of my said children has predeceased me, then the share which would have been received by my predeceased child I hereby give, devise and bequeath to the issue of said predeceased child, if any.

SEVENTH: If my said wife shall predecease me, then and in that event, I give, devise and bequeath all my estate including any lapsed legacies to my beloved children, LEONARD SIEGEL and CHARLOTTE STRAUBER, in equal shares per stirpes, to be theirs absolutely and forever. In the event that either of my children shall predecease me, then, the share which would have been received by my predeceased child, I hereby give, devise and bequeath to the issue of said predeceased child, if any.

FOURTEENTH: If my said wife and I shall die under such circumstances that there is not sufficient evidence that we died otherwise than simultaneously, my said wife shall be presumed to have survived me and my estate shall be distributed and is hereby given, devised and bequeathed in such manner as would occur under this will, as if she had survived me.

FIFTEENTH: This will has been executed on the same date and simultaneously with the will of my beloved wife, MILDRED J. SIEGEL. It is understood that I will not change any provisions of this will, with respect to my children regardless of whether my beloved wife should predecease me.

IN WITNESS WHEREOF, I have on the 4th day of December, 1962, signed, sealed, published and declared the foregoing instrument as and for my Last Will and Testament, in the presence of each and all of the subscribing witnesses whom I have requested in the presence of each of the others, to subscribe his name, with his address, as an attesting witness, in my presence, and in the presence of the others.

Some of the pertinent provisions of Mildred J. Siegel's will are as follows:

I, MILDRED J. SIEGEL, residing in Kings County, State of New York, do hereby revoke all Wills and Codicils, as well as all other instruments of a testamentary nature heretofore made by me, and do hereby make, publish and declare this to be my Last Will and Testament in manner and form following:

FIRST: I declare that I am a citizen of the United States of America and I further declare that I have adopted and acquired the County of Kings, State of New York, as my domicile.

THIRD: I hereby give, devise and bequeath to my beloved husband, DAVID A. SIEGEL, all right, title and interest I may have in the home occupied by me as of the date of my death.

FOURTH: I hereby give, devise and bequeath to my beloved husband, DAVID A. SIEGEL, if he shall survive me, an amount equal to the maximum marital deduction allowable in determining the Federal Estate Tax payable by reason of my death, diminished by the value of all other property interests included in my gross estate for Federal Estate Tax purposes and which pass or have passed to my said husband, either under any other provision of this will or in any other manner outside of this will, in such manner as to qualify for said marital deduction.

FIFTH: If my said husband and my children, LEONARD SIEGEL and CHARLOTTE STRAUBER, or any other issue of my said children shall survive me, I give, devise and bequeath all the rest, residue and remainder of my estate, to my said beloved children, share and share alike, or if either of my said children has predeceased me, then the share which would have been received by my predeceased child, I heregy give, devise and bequeath to the issue of said predeceased child, if any.

SIXTH: If my said husband shall predecease me, then and in that event, I give, devise and bequeath all my estate including any lapsed legacies to my beloved children LEONARD SIEGEL and CHARLOTTE STRAUBER, in equal shares per stirpes, to be theirs absolutely and forever. In the event that either of my children shall predecease me, then the share which would have been received by my predeceased child I hereby give, devise and bequeath to the issue of said predeceased child, if any.

THIRTEENTH: If my said husband and I shall die under such circumstances that there is not sufficient evidence that we died otherwise than simultaneously, it shall be presumed that I survived my husband and my estate shall be distributed and is hereby given, devised and bequeathed in such manner as would occur under this will as if I had survived him.

FOURTEENTH: This Will has been executed on the same date and simultaneously with the Will of my beloved husband, DAVID A. SIEGEL, and it is understood and agreed that I will not change any provision of this Will, with respect to my children regardless of whether my beloved husband should predecease me.

IN WITNESS WHEREOF, I have on the 4th day of December, 1962, signed, sealed, published and declared the foregoing instrument as and for my Last Will and Testament in the presence of each and all of the subscribing witnesses, whom I have requested in the presence of each of the others, to subscribe his name, with his address, as an attesting witness in my presence and in the presence of the others.

Following David's death, his will was probated in the Surrogate's Court, Kings County, N.Y. Mildred has not executed a will subsequent to the one executed on December 4, 1962.

On its Federal estate tax return which was timely filed, the estate claimed a marital deduction in the amount of $138,065.82, which represented one-half of the adjusted gross estate. Respondent disallowed a portion of that deduction in the amount of $88,726.51, based on his determination that Mildred's interest in such portion was terminable.

OPINION

The issue presented is whether petitioner is entitled to a marital deduction under section 2056 for the value of the interest in property which decedent's surviving spouse received by virtue of his will.

In deciding this question, we must first look to the law of New York to determine whether the decedent's will provided Mildred a fee simple or merely a life estate in the property passing under it. Estate of Julius Selling, 24 T.C. 191 (1955). Under such law, the nature of the estate received by Mildred depends upon whether the mutual wills executed by the decedent and Mildred on December 4, 1962, created a contract which was binding on the survivor. ³ Edison v. Parsons...