Court Opinion

ID: 7821865
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:57:20.914056+00
Date Added: 2024-06-11T16:30:45.470868
License: Public Domain

John I. Purtle, Justice, dissenting. From the four corners of the testator’s will I perceive a husband who wanted to provide for his widow above all other things. He wanted to take full advantage of the Internal Revenue Code as it related to the marital deduction but he wanted to provide for his wife above all. It was for this reason he inserted in his will a provision which would guarantee her an amount equal to one-half of the gross estate as valued for federal estate tax purposes. This would prevent her from losing if the assets reduced in value before distribution. Additional evidence that the testator placed the welfare of his wife above taxes or son or anything else is the inclusion of the provision that she receive as much income from the residual trust estate as she needed to maintain her needs and standard of living. It is my opinion the testator meant exactly what he said when he stated: ... I give, devise and bequeath to Mary Sue S. Hanna assets of my estate, to be selected by the Executrix of this Will, in an amount ... If he had in mind a pecuniary bequest, he would simply have said, “I give her X dollars” or “half of my estate will be sold and the proceeds given to my wife.” Instead, he gave her a fractional gift of his estate by allowing her to select from the assets of the estate items in an amount equal to one-half of the adjusted gross estate. There is no doubt in my mind that the court has thwarted the will and intent of the testator in denying the widow the right to select assets as provided in the will. She is in reality being awarded less than one-half of the estate because the estate produced income and appreciated in value and this increase is being placed in the remaining part of the estate. The holding of the majority declares this bequest to be a pecuniary legacy and therefore subjects it to capital gains tax. No such tax would apply if the bequest were held to be a fractional one. In re Estate of Walker P. Inman, 22 Misc. 2d 573, 196 N.Y.S. 2d 369 (1959), the same argument was made as is presented by appellees in the present case. The words in the Inman will were very near the same as those used in the present case. The seventh article in the Inman will set up a marital trust for the widow in language as follows: An amount which shall equal one-half (1/2) in value of my adjusted gross estate, as that term is defined in Section 812(e)(2) of the United States Internal Revenue Code, as amended, 26 U.S.C.A. § 812 (e) (2), said one-half (1/2) to be reduced, however, by the aggregate ... passing ... to my said wife otherwise than by the terms of this article. The foregoing language is almost identical to the language in the case before us. In Inman the guardian for a minor son protested the distribution of assets in kind to the widow on the grounds that the assets had greatly appreciated in value since the evaluation for federal estate tax purposes was made. The court overruled the protest and allowed the assignment of assets to the widow to stand. Therefore, this same wording has clearly been held to be a fractional bequest rather than a pecuniary one. There is a comprehensive annotation of “specific percent” or “proportion” of estate or property in 87 ALR 3d 605. A large percent of the cases analyzed in this annotation are worded almost identically to the will before us. There seems to be very little argument that such bequest is fractional or percentage rather than pecuniary or dollars and cents. I will not burden this dissent with the many cases reported in the above annotation. The same question before us was presented in In re Penney’s Will, 43 Misc. 2d 517, 251 N.Y.S. 2d 490 (1964), wherein it was said: Respondents herein have taken the position that the language used in the will is in the nature of a pecuniary bequest, and therefore not subject to appreciation subsequent to the estate tax evaluation; that the gift was capable of exact computation when the adjusted gross estate was determined and is consequently a legacy of a fixed amount. This is the argument made by the appellees in the.case before us. The wording of the bequest in Penney was essentially the same as in the case before us. In Penney the surviving spouse same was in the case before us. In Penney’s the surviving same as in the case before us. In Penney’s the surviving spouse transferred to himself shares of the value of one-half of the adjusted gross estate, less the amount passing outside the will. The appellate court decided the language was ambiguous and looked outside the will to determine the intent of the testatrix. The court finally approved the treatment of the bequest as a fractional one in quoting from another case which stated: The results indicate a constructional preference for the percentage or fractional type of ‘marital deduction trust’. The court then approved the distribution in kind thus allowing the widower to participate in the appreciated value of the estate. The wording of the Penney will was in part as follows: (a) One-half (1/2) of the value of my adjusted gross estate (as defined in the United States Internal Revenue Code), and as finally determined for Federal estate tax purposes, less (b) The value of all interests in property, if any, which pass or have passed ... otherwise than under this will... The Penney language is by far more similar to a pecuniary bequest than the one in the present case which specifically allows the widow to select .. assets of my estate, to be selected ... in an amount which, when added to any other property which is passed or will pass to my wife independently of this bequest ... which will equal one-half of my adjusted gross estate as defined for federal estate tax purposes in the Federal Internal Revenue Code. Only assets that qualify for the marital deduction shall be available for selection ... fulfillment of this bequest.” The case which I think is the most clear and simple and presents exactly the same problem as we face is that of In re Nicolai’s Estate, 373 P. 2d 967 (Ore. 1962). The Oregon Supreme Court sitting in banc unanimously held the bequest to be a fractional interest of the estate. The exact words of the bequest were as follows: I give and bequeath to my wife, ETHEL NICOLAI, if she survives me, a portion of my estate equal in value to the maximum marital deduction allowable in the determination of the federal estate tax upon my estate, less the value of any property which passed or is deemed to have passed to my wife under other provisions of this will or otherwise. ... I authorize and empower my executors in their discretion to select the property to be transferred and delivered to my wife in accordance with this paragraph. ... This case was a contest between a widow and her children upon the interpretation of the foregoing marital trust bequest. The court held that it was the intention of the testator to create a fractional interest rather than a pecuniary legacy. In the many cases I have examined where the wording of the legacy was essentially the same as that in question here, the large majority of the cases have held the language to constitute a fractional interest of the estate. The question becomes rather critical when the assets of the estate appreciate in value during the time the estate is under probation. In cases where the legacy is held to be pecuniary the widow or widower is not allowed to share in the appreciation of the assets. On the other hand, if it is held to be a fractional interest, the surviving spouse will receive a proportionate share of the increase in value. This would also hold true for the income produced by the estate during probate. It appears to me that the majority opinion is erroneously based upon the premise that the testator preferred to save taxes over taking care of his wife. As I see it, all four corners of the will point to the testator having in mind to provide for his wife first and then take advantage of any tax provisions in the Internal Revenue Code. In my opinion, William Herbert Hanna desired most of all that his wife receive enough income to continue living in the manner to which she was accustomed and in so doing he felt that she should receive a fractional interest of his estate. Any other interpretation would be to defeat the intent of the decedent.