In re Johnson

Decided July 15, 1887

New York Surrogate's Court · decided 1887-07-15

<p>Where a will makes a bequest to one for life, with remainder over, all the benficiaries being in the category of those whose interests are subject to the tax imposed by the “ collateral inheritance tax ” act, L. 1885, ch. 483, the tax on the life estate is to be taken out of the income, and that on the remainder to be deducted from the principal. The fact that the amount of the latter will thus be reduced is no objection, since such reduction is lawfully made.</p> <p>Where the interest of the life beneficiary is not taxable, the amount of the remainderman’s tax is nevertheless lawfully payable out of the principal.</p>

Decided 1887-07-15

The Surrogate.

¶1The appraiser’s report is confirmed. I do not see that the objections made have any force. The principal objection is that the remainders would be diminished by the payment of the tax on the life estate out of the capital.

¶2The answer to this is that the tax on the life estate may and ought to be taken out of the income. The objection that the tax on the remainder will reduce the capital and so affect the income is not, I think, tenable, as long as it is lawfully so reduced. There is no other mode of ascertaining the value of the life estate than that adopted by the appraiser.