Title: Stickley v. Stickley

State: virginia

Issuer: Virginia Supreme Court

Document:

PRESENT: All the Justices 
DANIEL C. STICKLEY, JR., CO-EXECUTOR 
OF THE ESTATE OF DANIEL C. STICKLEY, SR., 
DECEASED 
 
 
 
 
 
 
 
   OPINION BY  
v.  Record No. 971244    
 JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
 February 27, 1998 
WILLIAM S. STICKLEY, CO-EXECUTOR 
OF THE ESTATE OF DANIEL C. STICKLEY, SR., 
DECEASED, ET AL. 
 
FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY 
John J. McGrath, Jr., Judge 
 
 
In this appeal, we determine whether an article in a 
will, which directs all estate taxes and administration 
expenses to be paid out of the residuary estate, avoids 
apportionment of the remaining estate taxes upon depletion 
of the residuary estate.  Because the testator treated all 
debts the same, we conclude that the estate taxes should 
not be apportioned and, therefore, will affirm the judgment 
of the lower court. 
I. 
 
This case concerns the interpretation of Article One 
in the Last Will and Testament of Daniel C. Stickley (the 
Testator), who died on May 4, 1995.  Article One of his 
will addresses the payment of death taxes and 
administration expenses: 
All estate, inheritance, and other death 
taxes including interest and penalties together 
with the expenses of my last illness and all 
administration expenses including an appropriate 
marker for my grave, payable in any jurisdiction 
by reason of my death,(including those taxes and 
expenses payable with respect to assets which do 
not pass under this will) shall be paid out of 
and charged generally against the principal of my 
residuary estate.  I waive any right of 
reimbursement for or recovery of those death 
taxes and administration expenses. 
 
Pursuant to the will, Daniel C. Stickley, Jr., and 
William S. Stickley, the Testator’s two sons, qualified as 
co-executors of the estate on May 11, 1995.  They are also 
the beneficiaries of the residuary estate. 
 
The Testator’s estate is solvent, but the residuary 
estate is insufficient to pay all the administration costs, 
debts, funeral expenses, and estate taxes as directed in 
Article One.  A dispute arose between the co-executors 
regarding the proper interpretation of the will and whether 
the estate taxes should be apportioned upon depletion of 
the residuary estate. 
Daniel Stickley filed a bill of complaint in the court 
below and asked the court to give aid and direction 
regarding the interpretation of the will, particularly in 
regard to the issue of apportionment of the estate taxes in 
excess of the funds available in the residuary estate.  
After considering written memoranda and oral arguments of 
the parties, the circuit court held in a decree dated March 
20, 1997, that “the proper interpretation of the testator’s 
 
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Will requires that estate taxes shall not be apportioned in 
the event of insufficient funds in the residuary estate.”  
The court further found that all estate taxes should be 
treated as a general charge against the estate like the 
debts and costs of administration to be paid from the 
assets in the probate estate.  Daniel Stickley appeals. 
I. 
 
When an estate owes estate taxes, Code § 64.1-161 
requires that such taxes be apportioned.1  This statute is 
“based on the principle that estate taxes should be 
equitably apportioned among the taxable legatees.”  
Lynchburg College v. Central Fidelity Bank, 242 Va. 292, 
                     
1 In pertinent part, Code § 64.1-161(A) states the 
following:   
 
Except as provided in subsection B of this 
section, whenever it appears upon any settlement 
of accounts or in any other appropriate action or 
proceeding that an executor, administrator, 
curator, trustee or other person acting in a 
fiduciary capacity has paid an estate tax levied 
or assessed under the provisions of any estate 
tax law of the Commonwealth, any other state or 
the United States heretofore or hereafter 
enacted, upon or with respect to any property 
required to be included in the gross estate of a 
decedent under the provisions of any such law, 
the amount of the tax so paid, together with any 
interest and penalty required by the taxing 
authority to be paid, shall be prorated among the 
persons interested in the estate to whom such 
property is or may be transferred or to whom any 
benefit accrues. 
 
 
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296, 410 S.E.2d 617, 619 (1991).  However, an individual 
may avoid apportionment by making directions in a will “for 
the payment of such estate taxes and . . . designat[ing] 
the fund or funds or property out of which such payment 
shall be made.”  Code § 64.1-165. 
In this case, the parties agree that the Testator, in 
Article One of his will, exercised his right under Code § 
64.1-165 to avoid apportionment of the estate taxes as 
otherwise would have been required by Code § 64.1-161(A).  
However, the dilemma for the co-executors is that the 
administration costs, debts, funeral expenses, and estate 
taxes exceed the residuary estate.  They disagree as to 
which fund or property should bear the burden of paying the 
estate taxes after the residuary estate is exhausted.  
Daniel Stickley asserts that the estate taxes that remain 
outstanding after exhausting the residuary estate should be 
apportioned.  William Stickley, on the other hand, argues 
that the Testator intended that the estate taxes be treated 
the same as all other expenses and administration costs.  
Thus, he contends that the remaining estate taxes should 
not be apportioned but should be a general charge against 
the estate.  We agree with William Stickley. 
Although Daniel Stickley argues otherwise, our 
decision in Lynchburg College is dispositive.  In that 
 
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case, the decedent’s will directed that all debts and 
expenses of administration, including any taxes levied 
against the estate, be paid as soon as practicable.  The 
decedent did not, however, specify any particular fund out 
of which the expenses and taxes were to be paid.  The sole 
question on appeal was whether that provision in the will 
was “sufficient direction to prevent the application of 
Virginia’s apportionment statute, Code § 64.1-161, or, 
stated differently, contains sufficient direction to meet 
the requirements of Virginia’s anti-apportionment statute, 
Code § 64.1-165.”  Lynchburg College, 242 Va. at 295, 410 
S.E.2d at 619.  We answered the question in the affirmative 
and concluded that, although the decedent did not designate 
the fund out of which the taxes were to be paid, the 
decedent, nevertheless, intended that the taxes be paid 
from the same fund which bore the burden of the other debts 
and administration expenses.  In short, the decedent 
intended that the estate taxes, debts, and administration 
expenses be treated as a charge against the estate, thus 
avoiding apportionment of the estate taxes. 
We find the same intent in this case.  The Testator, 
in Article One of his will, directed that the estate taxes, 
debts, funeral expenses, and administration costs be 
treated in the same manner by specifying that they all be 
 
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paid from the residuary estate.  An insufficient residuary 
estate does not change that intent.  When the Testator 
initially directed identical treatment of all these 
expenses, he successfully invoked the anti-apportionment 
statute, Code § 64.1-165, and having done so, apportionment 
does not apply, absent some direction to that effect by the 
Testator.  See Baylor v. Nat’l Bank of Commerce, 194 Va. 1, 
5, 72 S.E.2d 282, 284 (1952) (finding that since decedent 
made no distinction between debts, funeral expenses, and 
estate taxes, decedent intended that these obligations “be 
treated alike and be paid in the same manner and from the 
same fund”). 
Nor is it relevant that the Testator in this case 
designated a particular fund out of which to pay the estate 
taxes and administration costs while the decedents in 
Lynchburg College and Baylor did not.  The pertinent 
inquiry is not whether a particular fund was identified but 
whether the Testator intended that the debts, 
administration costs, and estate taxes be treated alike.  
“The intent of the testator is the cardinal rule,” and must 
be fulfilled.  Simeone v. Smith, 204 Va. 860, 863, 134 
S.E.2d 281, 283 (1964).  In the present case, the 
Testator’s intent to avoid apportionment of his estate 
taxes, even if the residuary estate is depleted, is further 
 
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evidenced by his waiver in Article One of any right of 
recovery of the estates taxes. 
For these reasons, we conclude that any estate taxes 
outstanding after exhaustion of the residuary estate should 
not be apportioned but should be charged generally against 
the probate estate.  The Testator satisfied the 
requirements of the anti-apportionment statute, Code § 
64.1-165.  Accordingly, we will affirm the judgment of the 
circuit court. 
 
 
 
 
 
 
Affirmed. 
 
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