First National Trust & Savings Bank v. Mary Star of Sea Catholic Church

GRIFFIN, Acting P. J. There is no conflict in the evidence. This matter comes to us on an agreed statement. It involves the question whether a direction in a will that “all inheritance, succession and estate taxes, Federal or State, upon any transfers, of property included in my gross estate for the purpose of determining such taxes, which shall become [25]payable by reason of my death, shall be paid out of my residuary estate” constitutes a direction against equitable proration of death taxes within the meaning of section 970 of the Probate Code so as to require that the share of the residue of the estate which is left to a charity be computed after, instead of before, deduction of such taxes.

Anna Regan Wilson died August 31, 1955. The will was dated June 11, 1954. A codicil was dated August 12, 1955. Contest of the codicil was filed by Gladys H. Daniels and subsequently dismissed. The estate was valued at $199,190.75 on February 27, 1956, and payments on account of inheritance taxes in the sum of $12,631.58 were paid by the executor. The federal estate tax return disclosed a tax due in the sum of $22,624.95.

Article Ninth of the will, as modified by the codicil, made several specific legacies and bequests, and the testatrix left the residue of her estate to the following persons and institutions in the following proportions:

Ralph Wilson.....................Stranger 5%

Walter Wilson....................Stranger 5%

Miss Jessie Wilson.................Stranger 15%

Mary Star of the Sea Catholic Church.................Charity 10%

Mrs. Marion Kane.................Niece 65%

Article Second of the will directed that all inheritance, succession and estate taxes, as above indicated, be paid out of the residuary estate. It is appellant’s (charity’s) contention that it should first take its 10 per cent free and clear of all taxes mentioned in Article Second of the will and that the proration statute, in the absence of any contrary direction in the will, expresses a general state policy directing the executor to pay the federal estate tax and to fix the impact of the tax upon each beneficiary’s share of the property that has contributed to the tax, citing sections 970-977, Probate Code; section 13842, Revenue and Taxation Code; section 2055, Internal Revenue Code; Estate of Cushing, 113 Cal.App.2d 319 [248 P.2d 482] ; Estate of Buckhantz, 120 Cal.App.2d 92, 100 [260 P.2d 794] ; In re Pepper’s Estate, 307 N.Y. 242 [120 N.E.2d 807] ; Estate of McAuliffe, 132 Cal.App.2d 476 [282 P.2d 541]; and cases cited therein.