Court Opinion

ID: 9737202
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:18:56.515409+00
Date Added: 2024-06-11T07:23:57.201435
License: Public Domain

RATLIFF, Judge,
dissenting.
The question in this case is whether the language in Item V of the testator's will is sufficient to require payment of all estate and inheritance taxes assessed in this estate out of the residuary state, thus defeating the apportionment statute, Indiana Code section 29-2-12-2. In my view it is not and I respectfully dissent.
The statute clearly requires apportionment of federal estate taxes unless the will directs otherwise. Ind.Code § 29-2-12-2. The apportionment statute further provides it is not applicable "where the decedent has, by will, provided for the payment of federal estate tax either by the recipients or from a particular fund." Ind.Code § 29-2-12-7. Neither has happened here. In fact, the will contains no express direction concerning the payment of death taxes. Rather, Item V merely provides that "[alfter the payment of all expenses, taxes, fees, court costs and bequests as hereinabove set out" the residue is to be divided into five equal parts. This hardly constitutes a clear and express requirement that the death taxes incurred as a result of the passing of all property, both included within and outside of the probate estate, be paid from the residue.
The intent of the apportionment statute is clear. Apportionment is required unless the will clearly and specifically directs otherwise. Pleska v. Zakutansky (1984), Ind. App., 459 N.E.2d 745, trams. denied. In Pleska, the will, in Item III, specifically directed "that all estate and inheritance taxes be paid out of the corpus of my estate by the executor ..." This court held "the provision in [the willl regarding the payment of taxes does not clearly provide that the apportionment statutes do not apply." Pleska at 749. If the language in Pleska did not clearly so provide, the mere reference to taxes in Item V of the will here not containing any language directing payment of such taxes cannot suffice to defeat the apportionment statute.
In this case, 78% of the decedent's assets were transferred outside the probate estate. Burdening the remaining 22% with payment of all the taxes should not be *67sanctioned absent clear and precise testamentary language so requiring. Indeed, such is one of the clear purposes of the apportionment statute. As this court pointed out in Pleska, the phrase "all taxes" has been construed as including taxes assessed against both the probate and non-probate property, or, as including only taxes assessed against property passing under the will. Plesko at 748.
"Thus, it has been declared that a provision in a will that all taxes be paid out of the residuary or general estate applies only to property passing under the will unless it specifically refers to other property, and that it has no effect on inter vivos dispositions which for one reason or another are drawn into the gross estate for tax purposes."
Pleska at 748, quoting from 69 A.L.R.3d 271.
Recognizing that other cases have held the phrase "all taxes" to be all encompassing, I believe the view expressed in the language found at 69 A.L.R.3d 271 is the better position and is more consistent with the purposes of the apportionment statute. See generally 69 ALR.3d 272-280 for cases illustrative of both positions. Thus, if the residuary probate estate is to be burdened with the payment of all estate and inheritance taxes, I would require specific and precise language demanding such a result. Otherwise, I would hold that a direction on a will to pay "all taxes" or "all estate and inheritance taxes" included only those assessed on property passing under the will. The language here does not do so. In fact, the words in Item V, relied on by the trial court, do not specifically direct payment of the taxes by the estate. Under the holding in Pleska such words are insufficient to defeat the apportionment statute as to federal estate taxes.
For the same reasons, the language in Item V is insufficient to overcome the general rule that Indiana inheritance taxes are levied on the share of the distributee.
I would reverse.