Connors v. Southern California First National Bank

Opinion

BROWN (Gerald), P. J. Kathryn Inez Connors, executrix of the will of Charles Richard St. John, appeals from the denial of her petition for orders prorating estate and inheritance taxes and requiring the beneficiaries of nonprobate insurance proceeds, which were included in the gross estate for purposes of determining taxes, to pay their proportionate share of the taxes to the executrix.

Charles Richard St. John died testate July 8, 1966. Most of his estate consisted of nonprobate insurance proceeds which went to his four children but were taxable to his estate. His will provided for a specific bequest of $10,000 to Kathryn, nominated her as executrix, and gave the residue in equal shares to decedent’s children. The will further provided: “I direct that all estate and inheritance taxes occasioned or payable by reason of my death, whether attributable to properties subject to probate administration or to outside transfers, shall be paid out of the residue of my estate disposed of by this Will, as an expense of administration and without apportionment, deduction or reimbursement therefor, and without adjustment among the residuary beneficiaries.”

The residuary estate was insufficient to meet the administration expenses and taxes. On July 28, 1967, the court settled Kathryn’s first and final account and by decree of distribution disposed of all property in the estate. None of the taxes were prorated to the decedent’s children by the decree of distribution. To pay the tax expenses, Kathryn’s specific bequest was abated so she received $2,300.74 cash and a real property lot located in Las Vegas, Nevada, with an appraised value of $1,300 under an omnibus clause in the decree disposing of “Such further sums as will equal a total of $10,000 of properties of decedent, whether described herein or not, to Kathryn Inez Connors.” Kathryn waived her executrix fees. No appeal was taken from the decree of final distribution.

By letter dated September 24, 1968, Kathryn was advised of a $3,561.47 tax deficiency in the estate by district director of the Internal Revenue Service. On December 17, 1969, Kathryn paid the tax deficiency plus accrued interest of $244.96 from her own funds. She has thus suffered a net loss from her involvement with the estate.

Kathryn petitioned for the order prorating taxes May 14, 1970; the court [1011]denied the petition and filed findings of fact and conclusions of law on October 26, 1970.