Tedford's Estate, In re

• Decision Date: 08 March 1966
• Docket Number: No. 52020,52020
• Citation: 140 N.W.2d 908,258 Iowa 890
• Parties: In the Matter of the ESTATE of Regina Vale TEDFORD, Deceased.
• Court: Iowa Supreme Court

Page 908

140 N.W.2d 908

258 Iowa 890

In the Matter of the ESTATE of Regina Vale TEDFORD, Deceased.

No. 52020.

Supreme Court of Iowa.

March 8, 1966.

James W. McGrath, Keosauqua, for Bruce R. Vale, appellant.

Frank F. Wilson, Mt. Ayr, for Jessie M. Lesan, executrix-appellee.

Stong & Dorothy, Keosauqua, for Vale Robert Winslow, appellee.

LARSON, Justice.

Regina Vale Tedford died testate on April 14, 1964, and her will was duly admitted to probate on May 1, 1964. This will, executed December 10, 1953, provided: 'FIRST: I direct my Executor hereinafter named to pay and discharge all of my just debts and funeral and testamentary expenses.' In the second paragraph she devised a 120-acre farm by description to Vale Roberts Winslow. In the third paragraph she devised 'all the rest of my property, real, personal or mixed,' to Bruce R. Vale. In the fourth paragraph she appointed an executor, and in the fifth paragraph provided: 'I hereby direct that my Executor, above named, shall pay all death and inheritance taxes which may be assessed against my estate or any beneficiary under this will; and I hereby authorize my Executor, Clyde Lesan, to sell, convey, mortgage, transfer or incumber, as he shall see fit any or all of my property of which I may die seized in order to carry out the terms and provisions of this my last will and testament.' It appears the farm given her niece was valued at $30,000.00, the remainder given to a brother was valued at $74,373.58, and the indebtedness was estimated at $1,000.00.

I. It is well settled that a testator may by appropriate provisions in his will shift the burden of taxation so as to relieve certain gifts at the expense of others. Courts have the task of construing such provisions according to the intent of the testator, not only by the language and arrangement of the provisions, but by all the attendant circumstances. However, where the provision is clear and there are no circumstances to suggest the intent was otherwise than as expressed in it, the courts give it full effect. In re Estate of Johnson, 220 Iowa 424, 262 N.W. 811; In re Estate of McCulloch, 243 Iowa 449, 457, 52 N.W.2d 67, and citations; Annotation, 141 A.L.R. 852.

It is appellant's position that there is nothing in the will or circumstances which clearly indicate an intention that the tax burden be placed anywhere but where the law places it, that the Iowa inheritance tax it not a property tax but is a tax upon the right of succession, and that the same rule of apportionment is fair and just as to the federal estate tax. He assigns as error the trial court's refusal to apportion both and the costs of this declaratory action. The trial court concluded the provisions of paragraph 'FIFTH' was an expression of intention by the testator that the taxes, including the Iowa inheritance tax and the federal estate tax, were to be charged upon the residuary estate and were payable from the general estate. We agree.

II. The general order for abatement for payment of debts and charges, federal and estate taxes, etc., is set out in section 436 of the Iowa Probate Code, and provides abatement without any preference or priority as between real and personal property, 'in the following order: '1. Property not disposed of by the will; 2. Property devised to the residuary devisee, except property devised to a surrviving spouse who takes under the will; * * *.' Section 437 provides: 'If the provisions of the will, the testamentary plan, or the express or the implied purpose of the devise would be defeated by the order of abatement stated in sections four hundred thirty-six (436) hereof, the shares of distributees shall abate in such other manner as may be found necessary to give effect to the intention of the testator.'

Thus, if it sufficiently appears testator intended these taxes and costs were to be treated as an estate expense, they must be paid from the residuary estate. In re Estate of Artz, 254 Iowa 1064, 1069, 120 N.W.2d 418.

III. The cardinal and governing rule in the construction or interpretation of a testatmentary disposition, we have said repeatedly, is the intention of the testator. In re Estate of McCulloch, supra. Therein we pointed out that intention must not be ascertained from a single part or paragraph of the will, but the instrument must be read and considered as a whole, each part in connection with every other part and with the entire will, and each part given meaning and operation if possible. Also see In re Estate of Syverson, 239 Iowa 800, 804, 32 N.W.2d 799.

Succession taxes, such as our inheritance tax, must ultimately be paid by the beneficiary under the will unless the provisions and language used in the will, considered as a whole, direct otherwise. Section 450.5, Code. We have said, to provide otherwise requires a testator direction by clear and express words or necessary implication. In re Estate of Johnson, supra.

We turn, then, to the provisions and language of the Tedford Will. While paragraphs 'FIRST' and 'FIFTH' are separate, both clearly state 'I * * * direct * * * my Executor * * * pay * * *.' The first paragraph clearly means to pay from the funds of the estate the just debts, funeral and testamentary espenses, from the top of the estate or, as provided in section 436 of the Probate Code, from property devised to the residuary devisee without apportionment. This is exactly what the law requires unless the testator expressly designates some other manner of payment. The fifth paragraph states in clear language that the executor is to pay the 'death and inheritance taxes which may be assessed against my estate or any beneficiary under this will.' (Emphasis supplied.) It will be noted both estate taxes and inheritance taxes are grouped together in this direction, and so under section 449 of the Probate Code we must decide whether this is a direction to take all the taxes from the residue of her estate, or to prorate them all. Section 449, as amended, provides: 'All federal and state estate taxes (as distinguished from state inheritance taxes) owing by the estate of a decedent shall be paid from the property of the estate, * * * unless the will of the decedent, * * * provides expressly to the contrary.' It is not contended and we do not believe paragraph 'FIFTH' expresses an intent to prorate the usual federal and state taxes referred to in section 449.

Our principal problem, then, is whether this paragraph, taken together with the other provisions of the will, and the circumstance that testatrix was assisted by counsel, means...