In New York the surrogate is not bound by the appraiser's report, but may take such further evidence as he deems proper, and base his decision thereon.1 Such report is not final. It is to aid the surrogate to decide what property is liable to the tax, and it is subject to confirmation, revision or rejection by the surrogate. And where all papers are not submitted to the appraiser before he makes his report, the proceeding will be remitted to him to proceed de novo,3 1 Matter of McPherson, 104 N. Y. 323; Est. of McGowan, N. Y. Law Jour. July 30, 1890. But see Matter of Vanderbilt, 10 N. Y. Supp. 239. 2 Est. of McGowan, supra. 3 Est. of Jones, N. Y. Law Jour. July 31, 1890. CHAPTER VI. VESTED AND CONTINGENT ESTATES, TRANSFERS INTER VIVOS, POWERS AND LEGACIES. 1. Life estates, annuities and joint tenancies. 3. Remainders and future estates. (a) Under English statutes. (b) Acts of Congress. (c) New York statutes. (d) Under Pennsylvania statutes. 4. Fraudulent transfers, trusts and gifts inter vivos. 5. Powers of appointment. 6. Legacies for debts and other obligations. § 1. Life estates, annuities and joint tenancies.We have already considered the general nature and constitutionality of collateral inheritance, legacy and succession tax laws,' and of the exemptions from taxation under such laws, including questions relating to the domiciliary condition either of person or property with respect to this tax. So the various provisions of law relating to the appraisement or valuation of property under these statutes have been considered in the preceding chapter. In the present chapter, in addition to the consideration of the liability of both vested and contingent estates or remainders, it has also been deemed proper 1 Chapters I, II. 2 Chapter III. 2 to include several other important topics, such as fraudulent or intentional transfers, trusts and gifts inter vivos to evade the tax,' powers of appointment, and legacies in payment of debts and other obligations.3 Cases embracing a right or power of disposition in the life tenant, where the remainderman is not exempt, and involving relative rights of life tenant and remainderman, have likewise been considered in the present chapter. The general rule is that the tax due by tenant for life is payable immediately when distribution is or should be made, and if payment is delayed the consequence must fall on him, and not upon the remainderman." So where there is a bequest of a fund in trust for one during life, with remainder to others, the tax is payable forthwith on the life estate out of accruing income, and on the principal when the life estate has fallen. The tax should be upon the clear value of the life estate at the testator's death, and not upon the value of the property when it is assessed." 1 Post, sec. 4. 2 Id. sec. 5. 3 Id. sec. 6. See sec. 2, post; sec. 3, subds. (c) and (♂), and Matter of Cager, 111 N. Y. 343; Nieman's Est. 131 Pa. St. 346. 5 Wharton's Est. 10 W. N. C. 106. Christian's Est. 2 P. C. R. 91; Matter of Johnson, 6 Dem. 146; Welling's Est. 2 W. N. C. 307, 308; Wharton's Est. supra; Thomson's Est. 12 Phila. 131; Forbes' Est. 16 Id. 356; Com's. App. (Cooper's Est.), 127 Pa. St. 438. U. S. v. Penn. Co. 9 Ben. 413; Matter of Leavitt, 4 N. Y. Supp. 179; 22 N. Y. St. Rep. 81; Chapter IV, sec 6. An annuity is an estate within the meaning of these statutes.1 The liability of such annuities to the tax is not affected by the fact that the income applied to their payment must be paid out of and is likely to diminish the principal fund.2 On the other hand it has been held that where the life tenant is an exempt person, there is no principle upon which the fund in his hands-and which he has the right to enjoy intact-can be appropriated for the purpose of paying a tax upon contingent annuities before the death of the life tenant, unless expressly directed by will; as where the gift was of a net annual sum of $1,200, and its payment was directed to be made quarterly in sums of $300, with the reservation of a principal sum out of the investments of the decedent's estate ample to yield a net income of $1,200 per annum, the tax falls upon the residue, and not upon the annuitant.5 Under the New York statute it has been held that where it is impossible to ascertain the person to whom such annuities will be payble until the death of the life tenant, they are not taxable until such death." So it has recently been held that the interest of a wife in real estate devised to herself and husband as tenants by the entirety is taxable during the husband's lifetime, as her interest is vested and certain 19. 1 Bispham's Est. 46 Leg. Int. 98; Thomson's Est. 5 W. N. C. 2 Est. of Leavitt, supra; Matter of Johnson, 6 Dem. 146. 3 Matter of Clark, 1 Con. Surr. Rep. 431; Matter of Hopkins, 6 Dem. 1. See Matter of Peck, 24 Abb. N. C. 365, note. See, also, Christian's Est. 2 P. C. R. 91, and cases cited supra. See cases post, sec. 6. Bispham's Est. supra. • Matter of Clarke, supra; and cases post, sec. 3, subd. (c). and she may, by statute, compel partition of the property. The statute has been construed at law, however, as only allowing the wife to claim partition where the husband agrees thereto. But the estate of the wife, as tenant by the entirety, being in the nature of a vested remainder which she could not be deprived of by any act of her husband, would seem to be a taxable interest under the statute, notwithstanding her husband should, refuse to join in partition proceedings. In England the liability of joint tenants for this tax is specially regulated by statute.* 5 2. Relative rights of life tenant and remainderman. The estate of tenant for life and that of remainderman are to be considered distinct and separate, and neither is to be affected by the tax, interest or penalty to be paid by the other. Hence tenant for life is entitled to the enjoyment of the entire estate while he lives, he paying only the tax assessed upon the value of such estate, while tenant in remainder, when he shall come into the possession and enjoyment, is entitled to it without other deduction than the tax paid by himself, and such interest as may 1 L. N. Y. 1880, ch. 472. 2 Est. of Higgins, N. Y. Daily Reg. Dec. 7, 1889; distinguishing Matter of LeFever, 6 Dem. 154; Matter of Hopkins, 6 Id. 1, and citing Willing's Est. supra. 3 O'Connor v. McMahon, 54 Hun, 66. See, also, Stetz v. Schreck, 32 N. Y. St. Rep. 133; Beach v. Hollister, 3 Hun, 519; Newell v. Newell, L. R. 7 Ch. App. 253. 4 36 Geo. III, ch. 52, sec. 15; 16 and 17 Vict. ch. 51, sec. 3. See Chapter I, p. 11, note. 5 Com's. App. (Cooper's Est.), 127 Pa. St. 438; 17 Atl. 1095. |