Opinion ID: 1993423
Heading Depth: 1
Heading Rank: 1

Heading: Grace was a Creditor

Text: The law is well settled that where a testator in his will gives specified property or a share of his estate in exact or substantial compliance with the terms of his obligations under an inter vivos property settlement (or separation) agreement made with his wife, that wife is a creditor of his estate and not a legatee under his will. Mills Estate, 367 Pa. 504, 80 A. 2d 809. Cf. also, Neller Estate, 356 Pa. 628, 53 A. 2d 122; Brown's Estate, 340 Pa. 350, 17 A. 2d 331; Mahoney Estate, 356 Pa. 358, 52 A. 2d 328; Coane's Estate, 310 Pa. 138, 165 Atl. 2; Bowman v. Knorr (No. 1), 206 Pa. 270, 55 Atl. 976. These cases in principle control and rule this case and sustain the decision of the Orphans' Court that Grace is a creditor and not a legatee. While few, if any, wills have a twin brother, Mills Estate, 367 Pa., supra, is factually close and in principle controlling. In Mills Estate the husband and wife entered into a written separation agreement in which the husband agreed (a) to make specified monthly payments in recognition of his duty of support and (b) to leave her in and by his will all his estate. Thereafter the parties were divorced, but the testator continued making the specified monthly payments until his death. He left a will which pertinently provided: ITEM 3: I give and bequeath my entire estate to Anna Irene Mills. This bequest is made in accordance with a certain agreement entered into between Anna Irene Mills and myself dated May 17, 1946. The Commonwealth contended that this was a legacy which was subject to inheritance tax. We rejected this contention and held that if the debt was contracted bona fide and for an adequate and full consideration in money or money's worth, Anna Irene Mills would take as a creditor that portion of Mills Estate for which he had received full and adequate consideration in money or money's worth [] in exchange for his agreement.