HomeMy WebLinkAbout03-15-07
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY,
PENNSYL VANIA
INRE:
ORPHAN'S COURT DIVISION
Estate of Ethel M. Baird, Deceased
Case No. 21-06-132
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1. Ethel M Baird (the "Decedent") died testate on December 22, 209;-~il residliiit of-::,
Cumberland County. -"-
STIPULATION OF FACTS
2. The Decedent's Will dated November 18, 2004, was admitted to probate and
Letters Testamentary were granted to Alice J. Hair as Executrix (the "Executrix"), by the
Register of Wills for Cumberland County on February 10, 2006.
3. After providing for a number of pre-residuary specific bequests of tangible
personal property and pecuniary legacies totaling Four Thousand Dollars ($4,000), the
Decedent's will left the residue of her estate to one charitable and three non-charitable
beneficiaries, in specified percentages: 20% to Grace Evangelical Church and. 80% to the non-
charitable beneficiaries.
4. Because the Grace Evangelical Church was no longer in existence, the
Community Evangelical Free Church and the Trinity Evangelical Congregational Church
executed "Consents to Compromise in Settlement of Cy Pres Determination of Beneficiary of
Ambiguous Bequests" agreeing to equally split the 20% residuary bequest to Grace Evangelical
Church.
taxes:
5. Item First of Decedent's Will includes the following direction for the payment of
"I direct that any and all inheritance, estate, and transfer taxes imposed upon my
estate passing under this Will or otherwise shall be paid out of the principal of my
residuary estate."
6. On or about August 9, 2006, the Executrix filed a First and Final Account of the
Estate (the "Account") for the period from December 22, 2005, through August 8, 2006.
7. The Executrix proposed to pay the inheritance tax from the distributable residue
of the estate, prior to dividing the residue into shares of the specified percentages, with the
following "Explanatory Note" appended to her Account:
"Inheritance tax is proposed to be deducted prior to distribution of the
residue according to the specified percentages, pursuant to the following "pay-tax
clause" at Item Fifth of the decedent's will:
'I direct that any and all inheritance, estate and transfer taxes imposed
upon my estate passing under this Will or otherwise shall be paid out of the
principal of my residuary estate. '
"As stated by Justice Roberts in Estate of Ereig, 439 Pa. 550, 558, 267
A.2d 841,846 (pa. 1970):
'In North Estate, 50 Pa.Dist. & Co. 703 (1944), the 'pay tax' clause was a
good deal more explicit than ['all taxes shall be paid from my residuary estate'],
stating that the estate taxes were to be paid 'out of the corpus or principal of my
residuary estate,' obviously indicating that the taxes were to be paid before
distribution ofthe residuary.'"
6. The Account showed a residue of $90,345.53 after payment of Inheritance Taxes.
The amount proposed to be distributed to each of the two Churches pursuant to the Account was
$9,034.56 to each Church, representing a 20% share or $18,069.12.
7. The total Inheritance Tax paid as shown in the Account is $11,271.89, of which
$646.28 was attributable to preresiduary bequests and properly paid before calculation of the
residue.
8. The Attorney General filed Objections to the Account on or about August 21,
2006. The Attorney General objected to the Executrix's proposed apportionment of Inheritance
Tax to the charitable residuary beneficiaries, as follows:
"As a matter of law in the absence of specific language allocating the
Inheritance Taxes to all the residual beneficiaries including the charities, the
charitable percentage of bequest should be taken against the net value of the estate
after adding back the Inheritance Taxes. See, In re Estate of Pyle, 391 Pa. Super.
244,570 A.2d 1074 (1990).
9. If the Attorney General's objections are sustained, the Inheritance Tax
attributable to the residual beneficiaries would be added to the balance for distribution
prior to calculation of the 20% charitable share of the residue, as follows:
$90,345.53 + (Balance after payment of Specific Bequests)
$10.625.61 (Inheritance Tax on non-charitable residual beneficiaries' shares)
$100,971.14 x 20% = $20,194.22 or $10,097.11 to each Church
Respectfully Submitted:
Respectfully Submitted:
SAlDIS, FLOWER & LINDSAY
THOMAS W. CORBETT, JR.
Attorney General
By:
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THOMAS E. FLOWER, ESQUIRE
Pa. Attorney I.D. No. 83993
By: Wuu....
NE BOOK COLES
Duty Attorney General
a. Attorney I.D. No. 82028
Office of Attorney General
Charitable Trusts & Organizations Section
Strawberry Square, 14th Floor
Harrisburg, Pennsylvania 17120
717-783-2853
March J.!:L., 2007
2109 Market Street
Camp Hill, PA 17011
717-737-3405
March 13 , 2007