No.  3--01--0428

_________________________________________________________________

	IN THE

	APPELLATE COURT OF ILLINOIS

	THIRD DISTRICT

	A.D., 2002

In re THE ESTATE OF ROBERT	)  Appeal from the Circuit Court

L. MAIERHOFER, DECEASED		)  of the 13th Judicial Circuit,

(JAMES L. MAIERHOFER,		)  La Salle County, Illinois,

EXECUTOR,					)

						)

	Appellee,				)

						)

	v.					)  No. 99--P--283

						)

FRANCIS M. MAIERHOFER,		)  Honorable

						)  William R. Banich,

	Appellant).			)  Judge, Presiding.

_________________________________________________________________

	JUSTICE SLATER delivered the opinion of the court:

_________________________________________________________________

	Robert L. Maierhofer died testate on October 29, 1999; his

will was admitted to probate on November 8, 1999.  Robert's

estate, consisting of various interests in real property and a

guardianship account of over $333,000, was valued at 

$1,390,282.60.  Federal estate tax amounted to $211,976.17;

Illinois estate tax was $52,487.63.  This appeal primarily

concerns the payment of those taxes and their effect on the

residuary clause of Robert's will.

	The appellant is Francis Maierhofer, one of the testator's

brothers.  Appellee James Maierhofer is Robert's other brother

and was the executor of the estate.  In the first paragraph of his will, Robert directed the executor to pay all debts, funeral

expenses and the cost of administering the estate, including

estate taxes.  The second paragraph devised various interests in

real property, primarily to Francis and James.  The third

paragraph stated:

			"I hereby give, devise and bequeath all

of the rest, residue and remainder of my

estate, whether real or personal property and

wheresoever situated unto my brothers,

Francis Maierhofer and James Maierhofer, in

the following proportions.  My executor,

after payment of debts, funeral expenses and

the cost and expense of the administration of

my estate shall divide said remaining

property into two separate shares in such

proportions as to render the relative value

of all gifts under this Will to my brothers

to be equal.  In making this determination,

the appraised value of any real estate shall

count against that brothers share, as if

received by them outright, without

calculating the values of the life estate,

separately from the remainder interests."

	The trial court ruled that the estate taxes should be paid

from the residuary estate.  As a result, the burden of those

taxes fell disproportionately on Francis, who paid about 80% of

the taxes.  Francis contends that the trial court erred in

failing to apply the principle of equitable apportionment, which

would have distributed the tax burden more equally.  We disagree.

	The trial court applied the "burden on the residue" rule in

this case.

			"Under this rule, taxes, debts and

expenses of administration attributable to

probate assets are borne by the residuary

estate in the absence of a contrary

indication in the will.  [Citations.]  There

is a presumption that the attorney who

prepared the will was aware of the rule when

he drafted it.  [Citation.]  The rule

operates as if it were written into the will

itself.  [Citation.]  If the will is silent

as to the payment of taxes or other debts or

fees allocable to probate assets, they are to

be treated as expenses of administration and

paid from the residue."  In re Estate of Britt, 112 Ill. App. 3d 186, 188, 445 N.E.2d 367, 369 (1983); see also Haberl v. County of Monroe, 142 Ill. App. 3d 152, 491 N.E.2d 909 (1986).

	The courts of this state have consistently applied the

burden on the residue rule (In re Estate of Maddux, 93 Ill. App. 3d 435, 417 N.E.2d 266 (1981)) and "this court has expressed the

belief that Illinois lawyers have long relied on this rule and

that 'countless wills have been drafted on this assumption'" 

(Haberl, 142 Ill. App. 3d at 155, 491 N.E.2d at 911, quoting In re Estate of Phillips, 1 Ill. App. 3d 813, 815, 275 N.E.2d 685, 687 (1971)).  Francis argues, however, that the principle of

equitable apportionment should be applied to equalize the tax

burden.  We disagree.

	Equitable apportionment is a term used to describe the

process of distributing the burden of estate expenses among

beneficiaries in the same proportion they cause such expenses to

be incurred.  Landmark Trust Co. v. Aitken, 224 Ill. App. 3d 843, 587 N.E.2d 1076 (1992).  Although many jurisdictions have

statutes providing for equitable apportionment of the estate

taxes among beneficiaries, Illinois does not.  Landmark Trust, 224 Ill. App. 3d 843, 587 N.E.2d 1076.  However, in Roe v. Estate of Farrell, 69 Ill. 2d 525, 372 N.E.2d 662 (1978), our supreme court adopted equitable apportionment in cases of intestate

estates containing both probate and nonprobate assets.  The court

subsequently extended the applicability of Roe to testate estates in In re Estate of Gowling, 82 Ill. 2d 15, 411 N.E.2d 266 (1980).  In both Roe and Gowling, the recipients of nonprobate assets were required to pay the taxes attributable to those assets.  However,

on several occasions this court has refused to apply equitable

apportionment to estates containing only probate assets.  See Landmark Trust, 224 Ill. App. 3d 843, 587 N.E.2d 1076; In re Estate of Fenton, 109 Ill. App. 3d 57, 440 N.E.2d 222 (1982); Maddox, 93 Ill. App. 3d 435, 417 N.E.2d 266.  Indeed, the appellate decision in Gowling pointed out that "two distinct rules" govern estate tax liability in Illinois:  the burden on

the residue rule applies to probate assets, while nonprobate

assets are subject to equitable apportionment.  In re Estate of Gowling, 77 Ill. App. 3d 548, 553, 396 N.E.2d 82, 86 (1979), aff'd, 82 Ill. 2d 15, 411 N.E.2d 266 (1980).  Moreover, the application of separate rules to different classes of assets is

not arbitrary:

			"[T]here are sound reasons for not

requiring contribution within the probate

estate, while at the same time apportioning

the tax burden between the probate and

nonprobate assets.  Within the probate

estate, the burden on the residue rule

prefers specific over general bequests and

devises in the allocation of tax burdens and for that reason is not manifestly unfair or a

great distance apart from what a decedent's

desires might ordinarily be assumed to be. 

(Phillips.)  On the other hand, '[i]t is unfair to deplete the residue and general

[probate] estate for the benefit of

nontestamentary assets when the decedent may

not have considered such assets as a part of

his estate for death tax purposes but which

are included under the broad concept of what

constitutes the "gross taxable estate."'  A.

Fleming, Apportionment of Federal Estate Taxes in Illinois--Current Status and

Drafting Suggestions, 63 Ill. Bar J. 522, 523 (1975)."  Gowling, 77 Ill. App. 3d at 553, 396 N.E.2d at 86.

	Accordingly, we find that the trial court did not err in

refusing to apply equitable apportionment to Robert's estate, as

it consisted almost entirely of probate assets.  Francis further

asserts, however, that the language of the testator's will

precludes application of the burden on the residue rule.  Francis

relies on the fact that the first article of the will directs the

executor to pay all "debts, funeral expenses and the cost and

expense of the administration of my estate including estate taxes" (emphasis added) as soon as may reasonably be done.  In contrast, the third article directs the executor to divide the

residue of the estate "after payment of debts, funeral expenses

and the cost and expense of the administration of my estate." 

Francis maintains that the omission of the phrase "including

estate taxes" from the third paragraph manifests an intent by the

testator to shield the residue from taxes.

	As we have indicated, where a will is silent regarding the

payment of taxes the burden on the residue rule requires payment

from the residuary estate.  Britt, 112 Ill. App. 3d 186, 445 N.E.2d 367; Maddux, 93 Ill. App. 3d 435, 417 N.E.2d 266.  Of course, a testator may designate what property should assume the

tax burden.  See Landmark Trust, 224 Ill. App. 3d 843, 587 N.E.2d 1076.  However, "[a]n intent to preclude application of the

burden on the residue rule must be found in the words of the will

itself and not in what is presumed to exist in the mind of the

testator."  Britt, 112 Ill. App. 3d at 190, 445 N.E.2d at 370.  In this case we do not believe that the testator's omission of

the phrase "including estate taxes" from the third article of the

will suggests an intent to shift the tax burden elsewhere.  It is

well settled that estate taxes are "considered an item of

expense, such as debts, funeral expenses, and the like."  First National Bank of Chicago v. Hart, 383 Ill. 489, 497, 50 N.E.2d 461, 464-65 (1943); see also In re Estate of Grant, 83 Ill. 2d 379, 415 N.E.2d 416 (1980); Lawless v. Lawless, 17 Ill. App. 2d 481, 150 N.E.2d 646 (1958).  In both the first and third articles

of the will, the testator directed the executor to pay the cost

and expense of administering his estate, which includes estate

taxes.  Mere acknowledgment of this fact in the first paragraph

in no way evidences a contrary intent.

	Nor do we find any ambiguity in the terms of the will. 

Although it is true that in construing a will, a court's primary

objective is to give effect to the testator's intent (In re Estate of Miller, 230 Ill. App. 3d 141, 595 N.E.2d 630 (1992)), the language of the will itself is the best proof of that intent

(In re Estate of Lind, 314 Ill. App. 3d 1055, 734 N.E.2d 47 (2000)).  Here, the testator's direction to pay the cost and

expenses of administration are consistent with the burden on the

residue rule.  We find no ambiguity.

	[The following material is nNonpublishable material under Supreme Court Rule 23 omitte4dd here.].

	Francis also contends that James should have been removed as executor due to a conflict of interest.  The record shows that

appellant filed a petition to remove James as executor on June

19, 2000.  In that petition and in a subsequent supporting

memorandum, Francis alleged that James had an inherent conflict

of interest due to his interests in certain property.  The properties at issue and the relevant interests of the parties are

set forth below.

	Foersterling/Dwight Farm

	Francis, James and the testator each owned an undivided 1/3

interest prior to Robert's death.  Robert's will gave each

brother a life estate in one-half of Robert's interest (i.e., 1/6th of the farm to each), with the remainder to each brother's

descendants.

	Latimer Farm

	Same as the Foersterling/Dwight Farm.

	Tedford Farm

	Neither Francis or James had an interest in this property. 

Robert's will gave James a life estate, with certain minor

exceptions, in the entire property, with the remainder to James'

descendants.

	The Morris House

	Francis owned an undivided 1⁄2 interest in the property. 

Robert's will gave Francis the remaining 1⁄2 interest.

	On May 19, 2001, Francis filed an action for partition of

the Foersterling/Dwight and Latimer farms naming James as a

defendant in both his individual capacity and as executor. 

Francis subsequently claimed that James could not properly

represent his own interests and those of the estate in the

partition action.  Francis also asserted that the third paragraph of the will required James to place a value on the Tedford farm

and the Morris home in order to equalize the gifts to the

brothers, creating an inherent conflict of interest.  In the

meantime, James filed a petition as executor requesting the court

to grant possession of the various properties to the parties

named in Robert's will.

	The trial court held a hearing on the petition to remove

James as executor and on the petition to grant possession of the

real estate on July 31, 2000.  Although no transcript of that

hearing is contained in the record, two orders were entered that

day.  The court granted possession of the Foersterling/Dwight and

Latimer farms in conformance with the terms of Robert's will, but

denied the request for possession of the Tedford farm and the

Morris house.  The court also entered an order concerning

appellant's petition to remove James as executor, which stated in

part:

			"Francis M. Maierhofer and James L.

Maierhofer have agreed that with the transfer

of possession from decedent's estate of the

real estate which is part of the partition

suit in Grundy County ***, the conflict of

interest at this time only extends to the

satisfaction of the executor's duties [as]

set forth in Article Third of decedent's will and that a special administrator should be

appointed only for the purpose of carrying

out the provisions of Article Third which the parties agree should be done after the

Internal Revenue Service issues its closing

letter regarding the Federal Estate Tax

Return filed by James L. Maierhofer as

Executor and prior to closing the estate." 

(Emphasis in original.)

	The court then appointed LaSalle National Bank as special

administrator for purposes of carrying out the third paragraph of

Robert's will.  After the bank filed its findings concerning the

value of the Tedford farm, and after the estate tax return had

been accepted and approved by the Internal Revenue Service, James

filed another petition to grant possession of the Tedford farm

and the Morris house.  Francis filed an answer to the petition in

which he asserted that the taxes had been improperly charged

against the residue and that possession of the property should

not be granted because it might be needed to carry out the

equalization provision of paragraph three of Robert's will. 

Francis also again requested the removal of James as executor

because of his "continuing conflict of interest" and his

"repeated breach of fiduciary duty" in attempting to minimize the

equalization to be made to Francis.

	On May 2, 2001, the trial court ruled that the burden on the

residue rule required payment of the taxes from the residuary

estate.  Therefore, since there was no reason for the real

property to remain in the estate, the court granted the petition

to transfer possession of the Tedford farm and the Morris house. 

The court also, with little discussion, denied appellant's

request to issue a citation requiring James to show cause why he

should not be removed as executor.  In our opinion, because the

gist of appellant's complaints against James concerned the

disposition of the real property and the interpretation of the

third paragraph of Robert's will, resolution of those issues

negated the alleged conflict of interest and essentially rendered

the removal issue moot.  We find no error.

	[The preceding material is nonpublishable under Supreme Court Rule 23].

	Francis next argues that the executor lacked the authority to petition the court to transfer possession of the Tedford farm

and the Morris house because the trial court's order of July 31,

2000, transferred possession of those properties to the

independent special administrator, LaSalle National Bank.  We are

aware of no principle of law, however, to support the proposition

that appointment of a special administrator for a limited purpose divests the executor of authority over the estate after the

special administrator has completed his task.  Moreover, section

20--1(c) of the Probate Act of 1975 (Act) provides:

			"(c) Upon petition of any interested person, the court may grant possession of real estate on such terms as it deems

appropriate to the heir or legatee thereof,

if it appears that the real estate or income

therefrom will not be needed for the payment

of claims, expenses of administration, estate

or inheritance taxes or legacies."  (Emphasis

added.)  755 ILCS 5/20--1(c) (West 1998).

	An "interested person" includes one who has a financial

interest or property right, such as an heir or legatee.  See 755

ILCS 5/1--2.11 (West 1998).  Thus, even if James lacked authority

as executor to petition the court for possession, he had

authority to do so as an "interested person" under the Act.  We

find no error.

	Finally, appellant argues that the trial court's order of

July 31, 2000, transferring possession of the Foersterling/Dwight

and Latimer farms, "determined that the estate taxes were charged

equally against the two families."  Thus, according to appellant,

the principle of res judicata prevents reconsideration of this issue.  However, we find nothing in the court's July 31, 2000, order, or anything else in the record, to support the claim that

the trial court "determined" how the estate taxes were to be paid

prior to its May 2, 2001, order.  We find no error.

	For the reasons stated above, the judgment of the circuit

court is affirmed.

	Affirmed.

	McDADE, J., concurs.

	JUSTICE HOLDRIDGE, specially concurring:

	The burden on the residue rule is well-established in

Illinois’ common law pertaining to testamentary disposition.  I

thus concur in the majority’s Opinion.  I write separately,

however, to express my concern regarding the propriety of the

rule.

	The third paragraph of Robert’s will shows that he intended

Francis and James to emerge from the disposition of his property

with gifts of equal value.  The record reveals the following

dollar figures: aggregate value of James’ specific bequests--

$429,000; aggregate value of Francis’ specific bequests--145,500;

value of the residuary estate--$127,000.  The third paragraph’s

equalization language entitled Francis to the entire residuary

estate, giving him property with an aggregate value of $272,500. 

The result was a disparity of $156,500 between the value of

Francis’ and James’ gifts under the will.  That disparity was inherent given the size of the residuary estate and the

circumstances of property value at the time of the disposition.

	Equitable apportionment of the estate tax burden would have

maintained this posture between Francis and James.  However, the

burden on the residue rule increased the disparity between them

by the value of the residuary estate ($127,000); all of which was

applied to the tax bill before James shouldered any of the

burden.  Thus, the rule defeated Robert’s expressed intention to

the tune of $127,000.

	I realize that Robert could have drafted his way around the

rule.  However, I question the soundness of using the rule as a

default standard.  I believe the default standard should engender

equality and that a drafted exception should be required for

unequal imposition of the tax burden.  Illinois’ common law

currently operates backwards and causes the type of strife we now

see between Francis and James.

	This court has previously stated:

	“In many other states, provision is made by

statute for apportionment of estate taxes in the

absence of specific testamentary direction to the

contrary.  [Citation.]  A statute on the subject could

deal at one time with the many problems involved. 

[Citation.]  The legislature could also specify an

effective date for a change with such widespread effects as an apportionment statute might have on wills

now in existence.  ***  If a change is to be made in

what we regard as a well established rule in this State

on allocation of the burden of estate taxes, we believe

it is for the legislature, and not for the courts, to

do so.”  In re Estate of Phillips, 1 Ill. App. 3d 813, 815-16 (1971).

	For the reasons stated above, I encourage the legislature to

enact a statute implementing equitable apportionment as the

default standard for imposition of testamentary estate taxes.