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Keywords

trialtrustwill

liabilityequitytrustwillrespondent

Related Cases

Industrial Nat. Bank of R. I. v. Barrett, 101 R.I. 89, 220 A.2d 517

Facts

Mary M. Tilley, the deceased, exercised a general testamentary power of appointment in her will, directing the Industrial National Bank to hold property in trust for her granddaughters. Upon her death, the estate faced various debts and taxes, leading to a dispute over whether the residuary estate should bear the burden of taxes on the appointed property. The court found that all factual allegations were admitted, and the parties had filed an agreed statement of facts regarding the estate's value and tax liabilities.

At various times within the three-year period preceding her death, Mrs. Tilley made gifts of stock to her respondent granddaughters which were included in her estate for federal estate tax purposes at a gross valuation of $92,995.50.

Issue

The main legal issues were whether the taxes and expenses of administration should be apportioned between the testatrix's estate and the trust created under her will, and whether the exercise of the power of appointment violated the rule against perpetuities.

Under the certification decree we are presented with two principal issues for our determination. The first, raised by the bill in equity, concerns the apportionment of taxes and expenses of administration between the testatrix' estate and the trust created under the fourth clause of her will.

Rule

The court applied the principle that in the absence of a clearly expressed intent in the will, the burden of debts, charges, and obligations falls on the residuary estate, and that property passing under a general testamentary power of appointment is deemed part of the donor's estate.

The basic rule of construction enunciated in those cases is that in the absence of contrary testamentary direction, the burden of all debts, charges and obligations falls on the residue.

Analysis

The court analyzed the language of Mary M. Tilley's will, particularly the clause directing her executors to pay all debts and taxes. It concluded that there was no clear expression of intent to impose the tax burden on the residuary estate, as the will did not specify that the residuary should cover taxes on appointed property. The court emphasized that the appointed property should bear its proportionate share of the taxes.

When we consider the tax clause of Mrs. Tilley's will wherein she directed her executors ‘to pay all my debts, funeral expenses, and expenses of administration, including all estate and inheritance taxes,’ we are unable to find the ‘clearly expressed intent’ which in Hooker v. Drayton, supra, we said was a prerequisite to imposing upon the residuary estate liability for the portion of the death duties attributable to the inclusion of appointed property in the taxable estate.

Conclusion

The court held that the taxes should be apportioned between Mary M. Tilley's estate and the trust corpus appointed under her will. The decree was to be entered in accordance with the court's opinion.

We hold, therefore, that the taxes in question should be apportioned between Mrs. Tilley's estate and the trust corpus appointed under clause fourth of her will.

Who won?

The Industrial National Bank and Aline C. Lathan prevailed in the case as the court ruled in favor of their interpretation of the will regarding tax apportionment.

Consequently, we shall consider it as part of same when referring to the arguments of the parties.

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