Court Opinion

ID: 9530610
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:01:34.181087+00
Date Added: 2024-06-11T13:28:11.209334
License: Public Domain

IRWIN, Justice
(dissenting).
In my opinion, the interests of Josephine Norris, Deceased, in the trust created by her husband, would be subject to the estate tax for the reason she died seized and possessed of an undivided beneficial interest in the trust during its term and a remainder in the principal of the trust upon its termination and final settlement.
In my opinion, we are not concerned with the legal title of the property during the term of the trust, but with what right, title and interest Mrs. Norris had, if any, in the *252trust upon her death. Had the interests of Mrs. Norris terminated at her death, as a life estate would terminate, she would have no interests to devise or that would descend according to the Laws of Succession if she died intestate, and there would be no estate taxes; if she died seized and possessed of any interest in the trust which did not terminate upon her death, it would be subject to an estate tax. Therefore, the determining issue would seem to be: “Did Mrs. Norris die seized and possessed of an interest in the trust, or did her interest terminate upon her death ?” This issue can be resolved only from the terms of the trust.
The trust was created for a period of twenty years from the date of death of Mr. Norris, and Josephine Norris, being a beneficiary, was seized and possessed of a beneficial interest in the trust for twenty years, and having such interest and by express provisions of the trust, was entitled to receive her proportionate share of three-fourths of the net income therefrom which the trustee, in its judgment deemed best to distribute. Title 60 O.S.1951 § 175.3(K) provides, “Beneficiary” means any person entitled to receive from a trust any benefit of whatsoever kind or character. Mrs. Norris also was seized and possessed of a remainder in the principal of the trust on final settlement thereof. Paragraph (J) of the above section provides, “Remainder-man” means the person ultimately entitled to the principal, and Mr. Norris’ will provided that at the end of twenty years the trustee would deliver to the beneficiaries their proportionate share of the trust.
The will also provided that Josephine Norris had the right and privilege, if she so desired, to dispose- of by will that part of said estate to which she would be entitled. By the express terms of her will, Mrs. Norris devised to her four children, in equal shares, “all that part of said trust * * * to which I would be entitled on final settlement of said trust estate at the expiration of the trust period therein provided, together with the income therefrom which might become payable to me, * * * in the event any of my said children above named shall predecease me or shall survive me and shall thereafter die prior to the expiration of said trust * * * then the share of said property above devised by me to such deceased person shall pass to and be distributed to the surviving children of such deceased person per stirpes.”
Each of Mrs. Norris’ children, who were devisees in her will, are seized and possessed of a beneficial interest in the trust during its term and a remainder on the principal of the trust on final settlement. These interests are subject to defeasance for the reason if one of her children dies prior to the expiration of the trust, his or her proportionate interest or share will be distributed to the surviving children of such deceased persons per stirpes. The grandchildren of Mrs. Norris, (who would be the-surviving children if a devisee should die) have a mere possibility of an estate as their interest is contingent on the death of a. named heir. Although the devisees who-will finally be entitled to receive her proportionate share of the trust on final settlement can not be definitely ascertained' until the expiration of the trust, the fact remains, there will be distributed to the dev-isees of the will of Mrs. Norris her proportionate share of the principal of the trust on final settlement.
Having determined -what interests the devisees in the will of Mrs. Norris took by virtue of her executing her will, we will now consider the devolution of these interests had she died -intestate. I believe this determination is pertinent for the reason the terms of the trust placed no mandatory duty upon Mrs. Norris to dispose of her interests, only “the right and privilege if she so desired”, and the trust did not provide for the disposition of her interest if she died intestate.
The only provision in the trust relating to the disposition of the interest of a deceased beneficiary of the trust is section 18, which provides: “In case of death of either of said beneficiaries, this Trust shall not thereby be terminated, but shall continue for its full term and on final settle*253ment with said Trustee, the Estate of the deceased beneficiary shall be paid as follows : “To any child or children then living, if any, of such deceased beneficiary, in equal parts. If there be no such child or children then living, then the same shall be divided and paid in equal parts to the surviving brothers and half brothers, sisters and half sisters of said beneficiaries, then living, and to the children then living of any deceased brother or sister, by right of representation.”
If Mrs. Norris were embraced in this provision and had died intestate and all of her children had died prior to her death or before the expiration of the trust, her brothers or half brothers, sisters or half sisters would have succeeded to her one-third interest in the principal of the trust on final settlement to the exclusion of her grandchildren; if only one of her children dies, her entire interest would go to her three surviving children, to the exclusion of any child or children of a deceased child; if only one of her children is living at the expiration of the trust, he or she would have succeeded to her entire interest to the exclusion of the children of the three deceased children of Mrs. Norris. Under this provision the interest of the children of Mrs. Norris, who survived her, would be contingent on his or her being alive at the expiration of the trust and would be subject to absolute defeasance by his or her dying before the expiration of the trust, and the grandchildren of Mrs. Norris would be absolutely excluded from receiving any interest.
If all of the children of Mrs. Norris are living at the expiration of the trust and she is embraced in this provision, each devisee in her will will receive the same interest on final settlement of the trust as they would have received had she died intestate. Without question though, Mrs. Norris materially changed the devolution of her interest in the trust by the execution of her will for the reason her children or the surviving children of a deceased child would be entitled to her proportionate interest, whereas under this provision the surviving children of a deceased child were completely excluded.
It is apparent that it was not the intention of Mrs. Norris when she elected to take under the will of Mr. Norris to be embraced in this provision and it is equally apparent that it was not the intention of Mr. Norris when he executed his will. As a will must be construed according to the intention of the testator, I do not believe section 18, of Mr. Norris’s will embraced the interest of Mrs. Norris, and in my opinion, if Mrs. Norris had died intestate, her interests would have survived her and become assets of her estate and would have descended according to the Laws of Succession and not under the terms of the will of Mr. Norris.
We will now consider the devolution of the interest of Mrs. Norris in the trust if she had died intestate and was not embraced in the provision relating to the disposition of the interest of a beneficiary who died prior to the termination of the trust. Since the interest of Mrs. Norris in the trust survived her death, it would become a part of her estate and descend according to the Laws of Succession.
The theory upon which inheritance and transfer taxes are imposed and sustained is that the state which confers the privilege of succeeding to property may attach thereto the condition that a portion of the property shall be contributed to the state. I do not believe it was the intention of the Legislature, nor did it enact laws, whereby interests in property which survive the death of the owner are exempted from the estate tax merely by the execution of a will, if the same property would be subject to the estate tax if it descended under the laws of inheritance and succession. Our laws make no such distinction or exemption.
For the foregoing reasons, it is my opinion that Mrs. Norris died seized and possessed of an interest in the trust which did *254not terminate upon her death, and that her interests would be subject to the estate tax.
I therefore respectfully dissent.
I am authorized to state that WILLIAMS, V. C. J., concurs in the views herein expressed.