2023 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.