Smith, In re
| Decision Date | 17 November 1969 |
| Docket Number | No. 242946,242946 |
| Citation | 24 Ohio Misc. 280,262 N.E.2d 891 |
| Parties | , 52 O.O.2d 297, 53 O.O.2d 373 In the Matter of the Trust u/w Rose Fischer SMITH, Deceased. |
| Court | Ohio Court of Common Pleas |
Rose Fischer Smith, who died on November 26, 1963, devised the residue of her estate, in trust, to her son, Ralph C. Smith, also known as Ralph Christie Smith, and George F. De Silver, also known as George De Silver, for the following purposes (inter alia):
'ITEM X. * * *.
'(a) The said Trustees shall pay all the net income of said trust estate to my son, Ralph C. Smith, at least as often as quarterly, for and during his lifetime.
'(c) Upon the death of my son, Ralph C. Smith, the property then held in trust, including all accrued and accumulated but undistributed net income shall be paid and conveyed to my grandchildren, Lucy S. Huebsch and Benedict Smith, equally, share and share alike, provided the oldest of said grandchildren has reached the age of forty (40) years.
'(d) Should the oldest of my said grandchildren not have reached the age of forty (40) years at the time of the death of my son, Ralph C. Smith, the property then held in trust including all accrued and accumulated but undistributed income, shall be held in trust for the use and benefit of Lucy S. Huebsch and Benedict Smith, until the oldest of said grandchildren shall have reached the age of forty (40) years.
'(e) When the oldest of my said grandchildren shall have reached the age of forty (40) years, the trust shall cease and terminate and my said Trustees shall pay over the corpus of this trust and all accrued and accumulated but undistributed income, to my said grandchildren, in equal shares, free and clear of the trust, absolutely and in fee simple.
'(f) In the event, either of my grandchildren should die before attaining the age of forty (40) years, then upon the death of such grandchild, if she or he is survived by issue, the Trustees shall pay over and distribute the principal and all accrued and accumulated but undistributed income of such grandchild's share to the issue of such grandchild, per stirpes, or of no issue of such deceased grandchild be then living, then to the surviving grandchild.
'(g) In the event Ralph C. Smith, heretofore named as co-trustee herein, shall, for any reason, fail to qualify as Trustee under this, my Will, or having qualified, becomes incapacitated, dies, resigns or is removed as co- trustee, then in either, any or all of such event, I nominate and appoint my grandson, Benedict Smith, be named as co-trustee hereunder.'
On December 3, 1963, Ralph C. Smith and George De Silver were appointed executors and trustees of the estate of Rose Fischer Smith, deceased, and on February 19, 1964, they filed their inventory as executors listing a probate estate valued at $823,361.53.
The First National Bank of Cincinnati was employed to act as agent to handle normal custodial and bookkeeping services for the executors and trusteees.
Rose Fischer Smith's husband, Benedict Smith, died testate on July 4, 1959. His estate was inventoried at $462,184.47, one-half of which was included in a marital trust created for the benefit of his wife, Rose, their son, Ralph Christie Smith, and their grandchildren, Lucy Beale Smith and Benedict Smith, and the grandchildren's lineal descendants.
The trustees of this trust (the said Ralph Christie Smith and George De Silver) were directed to pay all of the income from the trust to his wife, Rose, for the term of her natural life and were authorized upon his wife's death, 'to pay or otherwise dispose of the corpus of this trust to such persons, including her estate, in such estates and interests, outright or in trust, and in such manner and proportions as she by her Last Will may appoint.' His wife, Rose Fischer Smith, did not exercise this power of appointment.
Rose Fischer Smith's estate was inventoried at $823,361.53. The auditor increased this valuation to $830,606.46, upon which amount Ohio Inheritance Tax was fixed. The Tax Department filed exceptions, on June 15, 1964, to the determination of tax based upon the aforementioned valuation on the grounds that there was a failure to include the sum of $419,433.32 in Rose Fischer Smith's inheritance tax proceedings, which sum represented the value of the succession of the life estate to Rose Fischer Smith passing to her under her husband's will over which trust assets she had a power of appointment. The court, on July 13, 1964, sustained the exceptions of the Tax Department and redetermined the inheritance taxes due under Rose Fischer Smith's estate. The Ohio inheritance taxes were fixed at $37,403.20 and paid on August 13, 1964, and the federal estate tax was fixed at $221,827.45 and paid, $220,534.94 on February 26, 1965, and $1292.51 on August 26, 1966. Questions also arose during the administration of the wife's estate concerning the impact of income taxes on the trust property contained in both the husband's and wife's estates, and concerning the sale of real estate in the wife's estate. There was insufficient cash in the wife's estate to pay the inheritance and estate taxes in her estate.
Ralph C. Smith resided in Darien, Connecticut, and he relied upon his co-executor, George De Silver, The First National Bank, and the attorneys for the estate to carry out most of the details connected with the administration of his mother's estate. Because of the shortage of cash to pay the inheritance and estate taxes, totalling $259,230.65, Mr. De Silver, the bank, and the attorneys for the fiduciaries recommended to Ralph C. Smith that he and his co-fiduciary, George De Silver, use the 'accrued and accumulated but undistributed' income, which was due him under his mother's will to help pay the inheritance and estate taxes in his mother's estate with the definite understanding that he would be reimbursed by the trustees out of the assets of the estate for all of the 'accrued and accumulated' income due him which would be used to pay the taxes.
Ralph C. Smith married Augusta Louise Meyer on February 22, 1964, and he died on December 24, 1965, survived by his wife, Augusta, his son, Benedict Smith, also known as Benedict Nelson Smith II, also known as Benedict N. Smith II, and his daughter, Lucy S. Huebsch. Between the death of Rose Fischer Smith and the death of Ralph C. Smith, under the circumstances hereinbefore set forth, no income payments were made to Ralph from his mother's estate and only one $5000.00 principal payment was made to him under the provisions of Item X of the mother's will.
On December 24, 1965, when Ralph C. Smith died, the amount of accumulated but undistributed income due him amounted to $40,069.67, which had been used to assist in paying the inheritance and estate taxes in his mother's estate.
On April 13, 1966, after the death of Ralph...
To continue reading
Request your trial