Court Opinion

ID: 7959338
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:29:51.929187+00
Date Added: 2024-06-11T16:34:22.928834
License: Public Domain

Mackenzie, P.J.
(dissenting). I respectfully dis*271sent. I cannot agree with the majority’s holding that the probate court was within its jurisdiction in ordering the personal representative not to pay the federal estate tax on a protective basis. The probate court’s order did not relate to a matter within its exclusive jurisdiction under MCL 700.21; MSA 27.5021 since that order would not preclude any later federal court determination that the federal estate tax should have been paid. Federal taxes are imposed by federal, not state, law. See Old Kent Bank & Trust Co v United States, 362 F2d 444 (CA 6, 1966). Nor can the bank’s decision either to pay the tax or take the charitable deduction fairly be characterized as an "investment” of estate assets: hence MCL 700.561; MSA 27.5561 is inapplicable.
Furthermore, I find without merit the argument that the probate court’s order was proper under MCL 700.22(l)(k); MSA 27.5022(l)(k), which permits a probate court to instruct or direct a fiduciary as to "any applicable Michigan law affecting an estate”. The payment of federal estate taxes is a duty imposed by federal law, not state law. Although MCL 700.563; MSA 27.5563 states that a probate court may discharge the fiduciary and close the estate upon allowance of the final account and payment of all claims and taxes, this provision does not transform the obligation to pay federal estate taxes into a duty imposed by state law.
Even if the probate court did have jurisdiction to issue the order, I would hold that the order was clearly an abuse of discretion. If the charitable claimants ultimately prevail, payment of the federal estate tax would only possibly be detrimental to them, the extent of the harm dependent upon delay in payment of the refund and whether the interest paid on the refund might be less than the *272then-prevailing market rate. On the other hand, if respondents should prevail, nonpayment of the federal estate tax, as ordered by the probate court, would almost certainly be detrimental to them because of considerable penalties and interest on the overdue estate tax. The probate court acknowledged that it was highly unlikely that the IRS could or would waive payment of interest. Comparing the virtual certainty of harm to respondents by nonpayment of the tax (if they ultimately prevail) with the mere possibility of or slight harm to the charities by payment of the tax (if they ultimately prevail), clearly the court abused its discretion in ordering that the tax not be paid.
I would reverse with costs to appellants.