Opinion ID: 2369265
Heading Depth: 1
Heading Rank: 2

Heading: Income of widow after administration of estate.

Text: Three questions are raised by the complainants: (1) Did the testator intend that the entire net income for his widow be diminished by costs of administration? (2) Did the testator intend that his widow have at least $30,000 annually free from income tax? (3) Did the testator intend that stock dividends and stock rights be considered principal or income? (1) We find no intention on the part of the testator to shift the burden of costs of administration normally charged against income from income to principal. There is nothing to suggest, as we read the will, that the testator sought to alter the effect of rules generally applicable in the administration of trusts. The Probate Court will necessarily from time to time pass upon the proper allocation of expenditures by the trustees between income and principal. We do no more than determine that under the will the net income to which the widow is entitled is the total income of the trust less all expenses properly chargeable against income. (2) The beneficiary of income from from a trust ordinarily must bear the burden of the federal income tax. It is the income of the beneficiary that is so taxed, not the income of the trust. The widow urges that the general rule is not here applicable, and that the testator's intention as expressed in his will places the tax upon the principal of the trust. We do not agree with this position. We find nothing in the will to indicate any intention on the part of the testator to change the ordinary impact of the federal income tax. Had he intended in some manner, which we need not explore, to shift the burden to the principal of the trust, surely he would have expressed his intention in apt words. The income tax must rest where it falls under federal law. (3) On the allocation of stock dividends and stock rights between income and principal, we find no intention on the part of the testator to alter the application of the general rules, namely, that they are considered principal. Thatcher v. Thatcher, 117 Me. 331, 104 A. 515; Harris v. Moses, 117 Me. 391, 104 A. 703; 3 Scott on Trusts 2d ed. §§ 236.7, 236.9; Restatement, Trusts 2d § 236. As in our discussion of costs of administration, we do not here determine the result in any given situation. There may of course be facts surrounding a given stock dividend or stock right which would change the allocation between income and principal. In short, what we are here saying is that there is nothing in the will to alter the operation of applicable general rules. See Moore v. Emery, 137 Me. 259, 268, 18 A.2d 781.