NY Est Pow & Trusts L § 2-1.8 (2021)
2021 New York Laws EPT - Estates, Powers and Trusts Article 2 - Rules Governing Dispositions Subject to This Law Part 1 - Substantive Rules Governing Dispositions 2-1.8 - Apportionment of Federal and State Estate or Other Death Taxes; Fiduciary to Collect Taxes From Property Taxed and Transferees Thereof

§ 2-1.8 Apportionment  of federal and state estate or other death taxes;           fiduciary to collect taxes from property taxed and transferees           thereof  (a) Whenever it appears in any appropriate action or proceeding that a fiduciary has paid or may be required to pay an estate  or  other  death tax,  under  the  law  of  this state or of any other jurisdiction, with respect to any property required to be included in the gross tax  estate of  a  decedent under the provisions of any such law (hereinafter called "the tax"), the amount of the tax, except in a  case  where  a  testator otherwise  directs in his will, and except where by any instrument other than  a  will  (hereinafter  called  a  "non-testamentary   instrument") direction  is  given for apportionment within the fund of taxes assessed upon the specific fund dealt with in such  non-testamentary  instrument, shall be equitably apportioned among the persons interested in the gross tax  estate,  whether  residents or non-residents of this state, to whom such property is disposed of or to  whom  any  benefit  therein  accrues (hereinafter  called  "the  persons  benefited")  in accordance with the rules of apportionment herein set forth, and the persons benefited shall contribute the amounts apportioned against them.  (b) Unless otherwise provided, when a disposition is made by which any person is given an interest in income or an estate for years or for life or  other  temporary  interest  in  any  property  or  fund,   the   tax apportionable  against such temporary interest and the remainder limited thereon is chargeable against and payable out of the principal  of  such property  or  fund without apportionment between such temporary interest and remainder. The provisions  of  this  paragraph  apply  although  the holder of the temporary interest has rights in the principal, but do not apply to a common law annuity.  (c)   Unless  otherwise  provided  in  the  will  or  non-testamentary instrument, and subject to paragraph (d-1) of this section:  (1) The tax shall be apportioned among the persons  benefited  in  the proportion  that  the value of the property or interest received by each such person benefited bears to the  total  value  of  the  property  and interest  received  by  all  persons  benefited,  the  values as finally determined in the respective tax proceedings being the values to be used as the basis for apportionment of the respective taxes.  (2) Any exemption or deduction allowed under the law imposing the  tax by  reason  of  the relationship of any person to the decedent, the fact that the property consists of life insurance proceeds or the  charitable purposes  of  the  gift shall inure to the benefit of the person bearing such relationship or receiving such  insurance  proceeds  or  charitable gift, as the case may be.  (3)  Any  deduction  for  property previously taxed and any credit for gift taxes paid by the decedent  shall  inure  to  the  benefit  of  all persons  benefited  and the tax to be apportioned shall be the tax after allowance of such deduction or credit.  (4) Any interest resulting from the late payment of the tax  shall  be apportioned in the same manner as the tax and shall be charged wholly to principal.  (5)  Any  discount allowed for prepayment of the tax shall be credited wholly to the principal of the funds contributing the  moneys  used  for prepayment in proportion to the contribution made.  (d)  Subject  to subparagraphs (1), (2) and (3) of this paragraph, any direction as to apportionment or non-apportionment of the  tax,  whether contained  in  a  will or a non-testamentary instrument, relates only to the property passing thereunder, unless such will or instrument provides otherwise.  (1) Any such direction in a will which is later in date than  a  prior non-testamentary  instrument  and  which  contains  a contrary direction shall govern provided that the later will  specifically  refers  to  the direction in such prior instrument.  (2) Any such direction in a non-testamentary instrument which is later in  date  than  a  prior  will  or non-testamentary instrument and which contains a contrary direction  shall  govern  provided  that  the  later instrument  specifically  refers  to the direction in such prior will or instrument.  (3) Any such direction provided in a non-testamentary instrument  only relates  to  the payment of the tax from the property passing thereunder and such direction shall not serve to  exonerate  such  non-testamentary property from the payment of its proportionate share of the tax, even if otherwise directed in that non-testamentary instrument.  (d-1)(1)(A)  If  any part of the gross tax estate consists of property the value of which is includible in the gross tax estate  by  reason  of §2044 of the Internal Revenue Code of 1986 as from time to time amended, the  decedent's  estate  shall  be  entitled  to recover from the person receiving the property the amount by which the total tax  under  article twenty-six  of  the  tax  law  which has been paid exceeds the total tax under such article which would have been payable if the  value  of  such property had not been included in the gross tax estate.  (B)  Clause  (A)  of this subparagraph shall not apply if the decedent specifically directs otherwise by will.  (2) For the purposes of this paragraph, if  there  is  more  than  one person  receiving  the  property, the right of recovery shall be against each such person.  (3) In the case of penalties and interest attributable  to  additional taxes  described in subparagraph (1) of this paragraph, rules similar to subparagraphs (1) and (2) of this paragraph shall apply.  (e) In all cases in which any property required to be included in  the gross  tax estate does not come into the possession of the fiduciary, he is authorized to, and shall recover from the persons benefited  or  from any person in possession of such property the ratable amounts of the tax and  any  interest  payable  by the persons benefited. The surrogate may direct the payment thereof to the fiduciary and may charge such payments against the interests of the persons benefited  in  any  assets  in  the possession of the fiduciary or any other person. If the fiduciary cannot recover  the amount of the tax and interest apportioned against a person benefited, such amount may be charged in such manner  as  the  surrogate determines.  (f)  No  fiduciary is required to pay over or distribute to any person other than the fiduciary charged with the duty to collect  and  pay  the tax  any  fund  or  property  with respect to which the tax is or may be imposed until the  amount  of  the  tax  apportioned  or  which  may  be apportioned  against such fund or property and any interest due from the persons entitled thereto  is  paid  or,  where  the  tax  has  not  been determined or apportionment made, unless and until adequate security for such  payment  is  furnished  to  the  fiduciary  making such payment or distribution.  (g) The surrogate shall make such preliminary, intermediate  or  final decrees  or  orders  in  the  proceeding,  as  he  shall deem advisable, tentatively or finally apportioning the tax and any interest,  directing the  fiduciary  to  collect the apportioned amounts from the property or interests  in  his  possession  of  any  persons   against   whom   such apportionment has been made and directing all other persons against whom the  tax  and  any interest are apportioned or from whom any part of the tax  and  any  interest  may  be  recovered  to  make  payment  of  such  apportioned  amounts to such fiduciary; and if it is ascertained in such proceeding that  the  property  in  the  possession  of  the  fiduciary, otherwise  payable  to  a  person  liable  for  any  part of the tax and interest, is insufficient to discharge the liability of such person, the surrogate  may  direct  that  the  balance of the apportioned amount due shall be paid to the fiduciary by such other person. If, in  the  course of  the  proceeding, it is ascertained that more than the ratable amount of the tax and interest due from any person has been paid by him  or  in his  behalf the surrogate may direct an appropriate reimbursement of the overpayment.  (h) If the surrogate apportions any part of the tax against any person interested in non-testamentary property or apportions the tax among  the respective interests created by any non-testamentary instrument, he may, in  his  discretion,  assess  against  such  property  or  interests, an equitable share of the expense in connection with the  determination  of the  tax  and  the  apportionment  thereof. Whenever an attorney renders services to the estate or to its personal  representative  resulting  in the  exclusion  from  the  gross  taxable estate of any non-testamentary property or interests created by any  non-testamentary  instrument,  the surrogate  may,  in  his  discretion,  assess  against  such property or interests an equitable share of the compensation for such legal services rendered to the estate or to its personal representative  in  proportion to  the  benefit  received  by  such  property  or  interests  from such services, unless the decedent's will or the non-testamentary  instrument contains  a  direction  that  no portion of the tax shall be apportioned against such non-testamentary property or against interests  created  by any  non-testamentary  instrument. The surrogate may retain jurisdiction of  any  proceeding  until  the  purposes  of  this  section  have  been accomplished.