Court Opinion

ID: 9766769
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:58:15.273363+00
Date Added: 2024-06-11T07:30:25.642621
License: Public Domain

Dissenting Opinion by
Mr. Justice Cohen:
This is an appeal from an order of the Orphans’ Court of Erie County dismissing exceptions to an executor’s account and suggested distribution.
The contest revolves around the import of the following clause of Katherine Lander’s will: “First. I direct that all my just debts, funeral expenses, Federal Estate taxes and Pennsylvania Inheritance taxes be fully paid and satisfied by my Executors, as soon as conveniently may be, after my decease.”
Decedent’s estate, as it is composed for state inheritance and federal estate tax purposes, includes not only her probate assets, which are entirely disposed of *612by a residuary clause in tbe will, but also certain jointly held property with the right of survivorship. See Act of 1929, May 16, P. L. 1795, §1, amending Act of 1919, June 20, P. L. 521, §1, 72 P.S. §2301 (e) and “Internal Revenue Code of 1954”, §2040. The ultimate question raised is whether the recipients of the taxable assets bear the burden of the “death” taxes pro rata or whether the entire burden is upon decedent’s probate estate. The executor contends for the former result; while exceptants, who are survivors to the jointly owned, nonprobate property, contend for the latter. The lower court found that the tax burden should be borne pro rata. I agree.
The Pennsylvania inheritance tax law applicable to Katherine Lander’s estate,1 Act of 1919, June 20, P. L. 521, §1 et seq., as amended, 72 P.S. §2301 et seq., is a tax on thé right of succession or the privilege of receiving the property of the decedent. As such, it is the ultimate responsibility of the recipients, rather than the estate, to pay this tax; and it is to be borne by them pro rata according to their share of the taxable estate. Dravo Estate, 388 Pa. 551, 131 A. 2d 351 (1957) (per curiam affirmance of the opinion in 8 Pa. D. & C. 2d 88), Spangenberg Estate, 359 Pa. 353, 59 A. 2d 103 (1948), Anderson’s Estate, 312 Pa. 180, 167 Atl. 329 (1933). The decedent may allocate the burdens differently, but there must be a “clear direction to that effect,” Dravo Estate, supra, or “the provisions of the will must specifically so direct, or the intention of the testator must be plainly inferable from the terms of the will.” Anderson’s Estate, supra. In cases of doubt the burden must be left where the law places it. Dravo Estate, supra.
*613The federal estate tax is imposed on the transfer of the federally defined taxable estate and, unlike the state inheritance tax, is assessed against the estate as a whole. Liability for payment is placed upon the executor, but where the ultimate burden rests is a matter of state law. Internal Revenue Code of 1954, §§2001, 2002. Pennsylvania’s Estate Tax Apportionment Act of 1951 provides that the ultimate burden of the federal estate tax is borne by “the persons interested in property includible in gross estate in proportion that the value of the interests of each such person bears to the value of the net estate,” Act of August 24, 1951, P. L. 1405, §4(a), 20 P.S. §884(a), although the testator may direct that the burden shall be placed in a different manner, Id. §3(a), 20 P.S. §883(a). We have held that this statute creates a presumption that federal estate taxes are to be pro rated in accordance with its provisions “unless the testator in his will has clearly indicated an intent inconsistent with such presumption” by “a specific provision, clearly expressed” in “language . . . not . . . of doubtful import”: Hoffmann Estate, 399 Pa. 96, 160 A. 2d 237 (1960).
Therefore, it is clear that our statutory and case law directs that the ultimate burden of state inheritance and federal estate taxes is pro rated among the recipients of the taxable estate unless certain strict tests, set forth above, for inferring a contrary intent on the part of the decedent have been met. Exceptants contend that the provision of decedent’s will, quoted above, meets the tests for shifting the tax burden. I cannot agree.
First, in the cases where it has been held that the decedent’s language was sufficiently clear to shift the tax burden, at the very least there were specific words to indicate that decedent had a particular fund in mind when dealing with taxes and, therefore, it was *614inferable that this fund was to bear the tax burden. Audenried Estate, 376 Pa. 31, 101 A. 2d 721 (1954); Spangenberg Estate, supra, Roth Estate, 8 Pa. D. & C. 2d 70 (1956), Widener Estate, 81 Pa. D. & C. 106 (1951), York Estate, 75 Pa. D. & C. 164 (1950), Robertson Estate, 9 Chest. 105 (1959). In some of these cases the intent was even clearer because decedent not only specified the fund but used such words as “deduct from” or “charge against” or specified that certain recipients were not to bear any tax burden. The provision in question, however, merely directs the executors to pay the taxes.
Exceptants contend that it was not necessary that testatrix designate the fund to be burdened because executors can make payments only out of assets passing through their hands, assets which, in this case, are entirely comprised by the residuary estate. With respect to federal estate taxes this contention has no force. Federal law requires the executor to pay the entire federal estate tax,2 including amounts attributable to assets not passing through his hands, e.g., jointly owned property. But our state law directs that the takers of these nonprobate assets must reimburse the executor for these federal taxes in an amount proportionate to their share of the taxable estate.3 A mere direction to the executors that they pay the federal estate tax, therefore, does not “clearly indicat [e] an intent inconsistent with [the] presumption” that the ultimate burden of the taxes be pro rated. It simply directs him to do what the law requires. Where the question is whether probate assets should carry the entire tax burden rather than all the taxable assets pro rata, the statutory presumption must be followed *615in the absence of some specific words to indicate that decedent had in mind one fund rather than another when directing payment.
I am not concerned that my construction might render the words used as mere surplusage in that they merely direct the executors to do what the law requires them to do. Surplusage is not uncommon in wills. No one has or would contend that the words in the very provision in question directing executors to pay “just debts” are anything but surplusage. Further, while we ordinarily attempt to give some significant meaning to all the words of the will it must be remembered that the inference we are required to draw in this case is one that is inconsistent with the statutory presumption of pro rated federal tax burdens.
With respect to state inheritance taxes, there is more force in the contention that a mere direction to pay all such taxes, without specifying the fund to be ultimately burdened, is sufficient to negate the pro rata presumption where all the taxable assets are comprised by a residuary clause of a will and non-probate assets, e.g., jointly held property. Unlike federal taxes, the executor need only pay the state inheritance taxes on assets passing through his hands. Therefore, goes the argument, the words used direct him to do more than the law requires him to do. Such a direction standing by itself might be sufficient to imply an intent that the recipients of the nonprobate assets be relieved of their tax burden. But where such a direction would have to be extracted from a very loosely drawn clause which is obviously surplusage in part and is insufficient to shift the federal tax burden, it would be improper to find that the testator intended to draw such nice distinctions. Such an intent is not “plainly inferable”. Anderson’s Estate, supra. At *616least, there is doubt; so the burden must be left where the law places it. Dravo Estate, supra.
Second, I note that the provision in question directs that the specified payments be made “as soon as conveniently may be after my decease.” This clause modifies the verb “paid” and makes it probable that the entire provision is merely precatory, expressing the testatrix’s intent that penalties for late payments be avoided or that advantage be taken of the discount allowed for prompt payment of her state inheritance tax. Act of 1919, June 20, P .L. 521, §38, 72 P.S. §2442.
Finally, it is quite clear that this is not the type of “tax clause” usually inserted by draftsmen to allocate tax burdens in a manner different than that directed by law. Of. Casner, Estate Planning, Yol. II, p. 1290 (3rd ed. 1961) (sample will), 7 Page on Wills (Bowe-Parker rev.) §§62.3-62.5 (form). Of course, this factor alone is not conclusive. While our standards require a very clear indication of intent to shift tax burdens, they can be met with something less than the precision of the most expert draftsmen. Nevertheless, it supports my conclusion.
The basis of the majority’s error is its failure to recognize that the starting point for deciding who bears the burden of the taxes in question is not the words of the testatrix’s will. The starting point is our statutory and case law which commands that the taxes be pro rated. Then we turn to the will of testatrix to determine if it clearly and without doubt expresses a contrary intent. In other words, “polestars” shed no light on the resolution of the instant problem.
For these reasons, I dissent.
Mr. Justice Eagen joins in this opinion.

 Because decedent died before January 1, 1962, the amended 1919 statute rather than the new Inheritance and Estate Tax Act of 1961 is applicable to her estate. Act of 1961, June 15, P. L. 373, §103, 72 P.S. §2485-103.

 IRC §2002.

 Estate Tax Apportionment Act of 1951, P. L. 1405, §5(a), 20 P.S. §885(a).