Court Opinion

ID: 6260858
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:03:53.863511+00
Date Added: 2024-06-11T08:59:42.471863
License: Public Domain

Dissenting Opinion by
Me. J ustice Mandeeino :
I dissent. The effect of the majority decision is to require one citizen to pay taxes owed by another citizen. Such a requirement is a taking of property -without due process of law. The legislature granted the testator the authority to require that the estate pay all inheritance taxes owed. In effect, the testator has the power to limit the amount each devisee shall receive irrespective of favorable treatment which any devisee might otherwise receive by the state’s inheritance tax rate. For example, assume that a testator, who has an estate of $1,000, wishes that all inheritance taxes be paid from that sum before a distribution of one-half is made to his friend, X, and one-half to his son, B. If X’s tax rate, as a collateral heir, is 15% and his son’s rate, as a direct heir, is 2% and these amounts are deducted from the estate prior to distribution, both X and B would receive $457.50 from the residuary estate. That amount is computed as follows: $1,000 -1- 2 X 2% = $10 inheritance tax due on B’s share of the estate $1,000 -r- 2 X 15% = $75 inheritance tax due on X’s share of the estate $75 + $10 = $85.00 total inheritance tax due from the estate $1,000 — $85 = $915 residuary estate to be divided equally between X and B Therefore, X and B each receive $457.50 from the residuary estate. If, on the other hand, the tax had been payable by each devisee rather than by the estate, X would have received a net amount of $425 ($500— *549$75) and B would have received a net amount of $490 ($500 — $10). However, the testator, notwithstanding the fact that the state would give more favorable treatment to his son as a direct heir, wanted X to share equally with B. The testator could conceivably have computed the tax that the direct heir and the collateral heir would be required to pay and have divided his estate accordingly so that X and B would still be treated equally. However, rather than requiring the testator to perform an elaborate computation of the tax payable by each devisee, the state provides the testator a short cut—he can elect to have his estate pay the appropriate taxes directly and then have the net amount remaining, the residuary estate, divided as he wishes. That is the effect of section 718 (c). Once this right is afforded to a testator, it is highly inappropriate for the state, simply because it has not collected the tax due immediately or has failed to request that the largest amount payable be held in escrow, to force one devisee to pay more than his appropriate share of the inheritance tax due. The devisee should not have to pay for the state’s mistake.
The majority notes that the appellant may seek contribution from the other remaindermen. To force the appellant to absorb the cost of such litigation is to penalize him from the state’s error. Furthermore, we cannot require one citizen to pay another’s taxes simply because it is more convenient for the state. It should be the state’s responsibility, not the appellant’s, to seek the taxes due. This is especially true, where, as here, the appellant’s position as eventual devisee was not known to him at the time distribution was made. Appellant had no way to protect his interests. The state, however, was certainly able to protect itself at that time. For the state’s failure to take appropriate action, we should not now penalize the innocent appellant.
The majority is correct when it states section 718 designates the source of payment of the tax. That *550source in this case was the testator’s entire estate and not just the amount passing to the appellant. The state should not try to force the effect of its inaction at the time of initial distribution on the innocent appellant. The state should uphold its promise to the testator— that it shall follow the testator’s wishes if he determines from what source the inheritance taxes will be paid. The Commonwealth has every right to collect the full tax due. It, however, cannot force one, who the state recognizes should not have to pay the entire amount owing, to pay more thanh is fair share. See Zellefrow Estate, 450 Pa. 302, 308, 299 A.2d 248, 251 (1973) (Manderino, J., dissenting).