tax exoneration clause in New York

1967Matter of Jaret ( 44 Misc 2d 262 , affd. 24 A D 2d 479, affd. 17 N Y 2d 450) is not distinguishable and it strongly supports the view expressed herein for reversal. [See 48 Misc 2d 607 .]

1966Adopting his construction, however, would make the tax exoneration clause meaningless, a result which should be avoided (Matter of Jaret, 44 Misc 2d 262 , affd. 24 A D 2d 479, affd. 17 N Y 2d 450).

1984The purported tax exoneration clause in Matter of Shubert (supra, p 466 ), contained the following language: “ T direct that all estate, inheritance, succession, transfer or similar taxes on my estate passing under this will shall be paid out of my residuary estate.’ ” In Matter of Shubert (supra), the bulk of the estate, approximately $17,500,000, passed through the residuary to be divided into six equal shares.

1984The purported tax exoneration clause in Matter of Shubert (supra, p 466 ), contained the following language: “ T direct that all estate, inheritance, succession, transfer or similar taxes on my estate passing under this will shall be paid out of my residuary estate.’ ” In Matter of Shubert (supra), the bulk of the estate, approximately $17,500,000, passed through the residuary to be divided into six equal shares.

1982While it is a fundamental principle in the construction of a will to give effect to the intent of a testator, which includes the interpretation of a tax exoneration clause (Matter of Duryea, 277 NY 310 ; Matter of Olson, 77 Misc 2d 515 ), nevertheless where there is a clear charitable intent, it will not be thwarted by a strict literal reading of ambiguous language.

1978Since a will and codicil must be construed together (Matter of Nicholas, 33 NY2d 174 ), where the provisions of the will contain a tax exoneration clause broad enough to encompass all testamentary dispositions, the clause also applies to gifts contained in the codicil in the absence of a manifest intent to the contrary (Matter of Chodikoff, 50 Misc 2d 86 ; 20 NY Jur, Estate Taxes and Gift Taxes, § 196), one not present in the case before us.

1978Lastly, the direction to return the cash dividends received by the residuary legatees was a matter within the equitable powers of the Surrogate and was made in the due and proper exercise of his discretion (SCPA 201, subd 3; 2215, subd 3; Matter of Fisch, 58 Misc 2d 193 ).

1978Since a will and codicil must be construed together (Matter of Nicholas, 33 NY2d 174 ), where the provisions of the will contain a tax exoneration clause broad enough to encompass all testamentary dispositions, the clause also applies to gifts contained in the codicil in the absence of a manifest intent to the contrary (Matter of Chodikoff, 50 Misc 2d 86 ; 20 NY Jur, Estate Taxes and Gift Taxes, § 196), one not present in the case before us.

1974Nevertheless, the Commission argues that an interpretion of the exoneration clause can affect the extent of the charitable deduction, if any, for estate tax purposes, which would not be binding upon the IRS under Bosch (supra), and likewise would not be binding upon the Commission.

1967Matter of Jaret ( 44 Misc 2d 262 , affd. 24 A D 2d 479, affd. 17 N Y 2d 450) is not distinguishable and it strongly supports the view expressed herein for reversal. [See 48 Misc 2d 607 .]

1965There is a. strong policy in favor of statutory apportionment. * * * As was said in Matter of Mills ( 189 Misc. 136, 141 , affd. 272 App. Div. 229 , affd. 297 N. Y. 1012 , supra): 1 In case of doubt as to what the will means on the subject of taxes the statutory direction to apportion is absolute.’ In our opinion the executor has shown the existence of an ambiguity as to what the will means on the subject of taxes.” (Emphasis in original.) The Surrogate, however, reasoned that the tax exoneration clause (Article “Fourth”) must have been inserted in the will for a reason.

1965There is a. strong policy in favor of statutory apportionment. * * * As was said in Matter of Mills ( 189 Misc. 136, 141 , affd. 272 App. Div. 229 , affd. 297 N. Y. 1012 , supra): 1 In case of doubt as to what the will means on the subject of taxes the statutory direction to apportion is absolute.’ In our opinion the executor has shown the existence of an ambiguity as to what the will means on the subject of taxes.” (Emphasis in original.) The Surrogate, however, reasoned that the tax exoneration clause (Article “Fourth”) must have been inserted in the will for a reason.

1965The very fact that IJie Surrogate found it necessary to construe the meaning of a tax exoneration clause which he felt was otherwise meaningless creates a doubt which makes absolute the application of the statutory formula (Matter of Pepper, supra; Matter of Shubert, 10 N Y 2d 461).