Court Opinion

ID: 7028539
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:12:46.540913+00
Date Added: 2024-06-11T16:10:51.884082
License: Public Domain

JUSTICE COOK, dissenting: I respectfully dissent and would affirm the trial court’s decision. Decedent attempted to divide her substantial estate equally between her daughters, Green and Chapman. Each received real property under the will and each received nonprobate personal property through joint tenancies. It is difficult to divide real estate equally, however, and Chapman received real estate worth more than Green, although Green received more property overall. The majority reverses the trial court because it says it wants to treat the daughters equally. It is not equal treatment, however, to split the estate tax equally between unequal recipients, i.e., to require Chapman to pay taxes on the real estate received by Green. Chapman received property worth less than the property received by Green, and now Chapman is required to pay a disproportionate share of taxes. I agree that Fry is the key case here. Fry begins with the proposition that equitable apportionment, the distribution of the burden of estate taxes among the beneficiaries in the same proportion as they respectively cause such expenses to be incurred, is the general rule in Illinois. Equitable apportionment promotes fairness and equality and makes good sense, although the concern has been expressed that Illinois does not provide for equitable apportionment by statute. Fry, 188 Ill. App. 3d at 338, 544 N.E.2d at Ill. Nevertheless, equitable apportionment will be applied unless “the testator has expressed a clear intention to the contrary.” Fry, 188 Ill. App. 3d at 339, 544 N.E.2d at Ill. In Fry, the testator directed that all taxes due by reason of her death be paid out of “ ‘my residuary estate, without reimbursement from any person.’ ” Fry, 188 Ill. App. 3d at 338, 544 N.E.2d at 110. Again, such a provision makes good sense. Under it, every specific gift made by the testator is honored in full, without any charge against the beneficiary. The taxes and expenses of the estate are paid out of the residue, that which is left of the estate after the various gifts are made. In a case like ours, where the residue is divided equally between the two individuals who receive the rest of the estate, the direction for payment from the residue may result in one individual paying more than her share. Such a result may be justified, however, on the basis that it is important that all specific gifts be honored in full, without concern that it may be necessary to liquidate the gift to pay the taxes on it. Division of what is left over in the residue is generally less important to a testator than the specific gifts that have been made. In Fry, the question was whether the taxes on a nonprobate gift of real estate should be paid out of the probate estate even after the residue was exhausted. Why should nonprobate gifts be favored over probate gifts? If a testator gives 80 acres to one son by means of joint tenancy and another 80 acres to another son by will, why should either son be given some advantage in the payment of taxes? The court in Fry stated that the intent of the testator was clear that the taxes be paid from the residuary estate and not from the non-probate asset received by the respondent. The court went on to note that although the residuary estate will be exhausted, there were ample assets in the probate estate to pay the federal estate taxes and the expenses of administration. Fry, 188 Ill. App. 3d at 340, 544 N.E.2d at 111-12. It is difficult to explain that reasoning. Fry relied upon In re Estate of Wheeler, 65 Ill. App. 2d 201, 203, 213 N.E.2d 35, 36 (1965), but in that case the will provided that the taxes were to be paid out of the principal of the estate, not the residuary estate. Perhaps the explanation is that the will in Fry contained only one minor “specific” bequest, a bequest that singles out a particular thing the testator intends the donee to have without regard to its value. Fry, 188 Ill. App. 3d at 337, 544 N.E.2d at 110; see Landmark Trust Co. v. Aitken, 224 Ill. App. 3d 843, 856, 587 N.E.2d 1076, 1085 (1992). The Fry will apparently consisted primarily of a “general” bequest to the testator’s stepson (was the nonprobate gift to testator’s natural son?). A general bequest is one that could be satisfied out of general assets, one where the chief element of the gift is its value. A general bequest is somewhat similar to a gift of the residue. “[Sjpecific legacies are preferred over general legacies such that the specific legacies are satisfied first if the estate is insufficient to pay all legacies.” Landmark Trust, 224 Ill. App. 3d at 856, 587 N.E.2d at 1085; 755 ILCS 5/24 — 3(b) (West 2002). None of that analysis has any relevance here. There is no question here whether the nonprobate assets should be favored over the probate assets. Green and Chapman received both. There is no question whether general bequests should pay the taxes on specific bequests. All the gifts to Green and Chapman, other than the residue, are specific gifts. The majority says that “[sjimilar to the decedent in Fry, decedent in the instant case clearly stated her desire not to have her daughters be personally responsible for her estate’s taxes.” 353 Ill. App. 3d at 644. The majority decision does nothing to further that intent. The daughters will be personally responsible for the estate’s taxes in any event. There is not enough money in the estate, either in the residue or in general bequests, to pay the taxes on the specific gifts of real estate. Green and Chapman are going to have to reach into their own pockets to pay these taxes. The only question is whether Chapman has to pay taxes incurred by Green’s receipt of property. Nothing indicates any such intent on the part of the decedent. The decedent directed that taxes be paid “from the rest, residue and remainder of my personal estate.” That has been done to the extent possible. The trial court refused to require Chapman to pay the additional taxes, and so should we.