Pfeufer v. Cyphers
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Pfeufer v. Cyphers, No. 141, September Term 2004. Opinion by Bell, C.J. WILLS - INHERITANCE TAXES A testator m ay direct inheritan ce taxes to b e paid from the entire resid uary estate prior to apportionment among residuary legatees even when a statute exempts some of the residua ry legatee s from the paym ent of in heritanc e taxes. IN THE COURT OF APPEALS OF MARYLAND No. 141 September Term, 2004 ______________________________________ BRUCE PFEUFER v. PAMELA J. CYPHERS, PERSONAL REPRESENTATIVE OF THE ESTATE OF JAMES RUSSELL HOFFMAN ______________________________________ Bell, C.J. Raker *Wilner Cathell Harrell Battaglia Greene, JJ. ______________________________________ Opinion by Bell, C.J. ______________________________________ Filed: March 19, 2007 *Wilner, J., now retired, participated in the hearing and conference of this case while an active member of this Court; after being recalled pu rsuant to the C onstitution, A rticle IV, Section 3A, he also participated in the decisio n and a doptio n of this opinio n. The instant case involves the interpretation of language in the Last Will and Testament of James Russell Hoffman, the testator, and the effect of that language in light of Maryland Code (1988, 20 04 Rep l. Vol.), § 7-203(b)(2) of the Tax-General Article.1 The testator left his residuary estate to four people, three of whom are relatives of the testator and, therefore, pursuant to the above statute, each of whom is exempt from paying inheritance taxes on his or her share o f the residua ry estate. That is no t the case w ith Bruce P feufer, the f ourth residuary legatee, the appellant. He is not a relative of the testator and, thus, he does not enjoy any such exemption. Nevertheless, the appellant contended in the Orphans Court for Montgom ery County that, even though the statute does not contain an exemption from paying inheritance tax for h im, Artic le III of th e testato r s will, because it requires that any inheritance tax be paid prior to apportionment or, off-the-top, in effect, does. The Orphans Court d id not ag ree and , rather than ap portion the ta x, ordered th e tax to be p aid solely by the appellant. The appellant noted an appeal to the Court of Special Appeals. He 1 Section § 7 -203 prov ides, in relevan t part: * * * * (b) Family allowance. - (1)(i) In this subsection the following words have the me anings indicate d. (ii) Child includes a stepchild or former stepchild. (iii) Parent includes a stepparent or former stepparent. (2) The inheritance tax does not apply to the receipt of property that passes from a decedent to or for the use of: * * * * (iv) a c hild of th e dece dent . . . * * * * (vi) a b rother o r sister of the dec edent . . . . asked that court to decide wh ether a testator may provide in his will that inheritance taxes be paid from the entire residuary estate prior to apportionment among the residuary legatees when a statute provides that some of the residuary legatees are not required to pay inheritance taxes.2 On our own motion and prior to proceedings in the Court of Special Appeals, we issued a writ o f certior ari, Pfeufer v. Cyphers, 385 Md. 161, 867 A.2d 1062 (2005). W e shall hold that a testator may direct inheritance ta xes to be p aid from th e entire residu ary estate prior to apportion ment am ong residu ary legatees eve n when a statute exempts some of the residuary legatees from the payment of inheritance taxes. Thus, we shall reverse the judgem ent of th e Orph ans C ourt. I. The testator s will provided that his residuary estate be distrib uted equa lly to Pamela J. Cyphers, his daughter, the appellee,3 to James Russell Hoffman, Jr., his son, to Janice Carol Hoffm an, his sister, and to the appellant. Section 7-203(b) exempts from payment of inheritance taxes enumerated relatives of the testator, including children and sib lings. As 2 As phras ed by the app ellant, the issue p resented w as: Did the Trial Court err in holding [that] all the inheritance ta x should be borne solely by appellant instead of being paid out of the residuary estate prior to division into shares? 3 Ms. Cyphers is also the testator s personal representative. 2 the appellant is n ot one of s uch enum erated relative s, the statute does not exempt him from the payment of such taxes. In an amended First and Final Administration Account for the estate, the appellee deducted the inheritanc e tax due o n the appe llant s residuary bequest4 from the entire residuary estate befo re allocating th e balance o f the residua ry estate in equal shares to each of the fou r residua ry legatee s. She did so on the auth ority of Article III o f the testator s w ill, which provides: I direct that all estate, inheritance, transfer, legacy or succession taxes, or death duties (including interest and penalties thereon) which may be assessed or imposed with respect to my estate, or any part thereof, of whatever na ture and descrip tion and where soever situated , . . . shall be paid out of the principal of my residu ary estate; and such payment shall be made as an expense of the administration of my estate without apportionment. (Em phasis a dded.) Over a month later, apparently prior to distribution of the residuary estate, the appellee filed an Amended Schedule G to the Account, which reallocated the payment of the inheritance tax. Rather than from the residuary estate, the inheritanc e tax now was to be paid entirely from the appellant s share of the residuary estate. Excepting to the reallocation, the appellant argued that the appellee s initial allocation of the inheritance tax burden was correct, Article III of th e will required th at such taxes be paid o ut of the entire residuary estate and not solely from his portion of the resid uary e state. The Orphans Court for Montgomery County overruled the exception, holding that the allocation of the tax burden 4 The amount of the inh eritance tax due on ap pellant s share of the residuary estate was $14,500. 3 reflected in Amended Schedule G was appropriate. It reasoned: All right. W ell, this m ay be one of those battle-of-the-forms kind of situations, where you have boilerplate language that is, in most case s, not a problem, but in a rare case such as this, a problem is created when sort of stock boilerplate language is used and that may be what happened here. I think the legislative intent, as indicated by Section 7-203(b) of the Tax-General Article, is very, very clear that lineal legatees are exempt from inheritance tax pursuant to that section. That is the clear intent of the legislature. And, for those reason s, the ex ception s are ov erruled . This appeal ensued. For the reasons that follow, we shall reverse the judgment of the Orphan s Court. II. It is well settled that the findings of fact of an Orphans Court are entitled to a presumption of corr ectness . New Y ork State Library Ass n v. Atwater, 227 Md. 155, 157, 175 A.2 d 592, 59 3 (1961); Shapiro v. Marcus, 211 Md. 83, 88, 124 A.2d 846, 849 (1956). It is equally well settled, however, that interpretations of law by such courts are not entitled to the same presumption of correctness on review: the appellate court must apply the law as it understands it to be. Comptroller of Treasury v. Gannett Co. Inc., 356 Md. 699, 707, 741 A.2d 1130, 11 41 (1999) (quoting Rohrbu rg v. Estate of Stem, 305 Md. 443, 447 n.2, 505 A.2d 113, 115 n.2 (1986). Thus, an appellate court, including this Court, must determine whether the conclusions of law made by a trial court in the first instance are legally correct under a de novo standa rd of re view. Banks v. Pusey, 393 Md. 688, 697, 904 A.2d 448, 454 4 (2006) (quotations omitted)); see Bern-Shaw Ltd. Partnership v. Mayor and City Council of Baltimore, 377 Md. 277, 291, 833 A.2d 502, 510 (200 3); J.L. Matthews, Inc. v. MarylandNational Capital Park and Planning C omm n, 368 Md. 71, 93 , 792 A.2d 288 , 301 (2002). 5 III. When construing a will, the paramount concern of the court is to a scertain and effectuate the testa tor s exp ressed in tent. Emmert v. Hearn, 309 Md. 19, 23, 522 A.2d 377, 379 (1987) (citing Leroy v. Kirk, 262 Md. 27 6,279,277 A.2d 61 1,613 (19 71)); Shellady, Inc. v. Herlihy, Ex r, 236 M d. 461, 471 , 204 A.2d 504, 509 (1964); Marty v. First Nat l Bank of Baltimore, 209 Md. 210, 216-17, 120 A.2d 841, 844 (1956)). In o ther word s, the search is not for the testator s presumed [intention] but for his expressed intention. Leroy, 262 Md. at 279, 277 A.2d at 613 (citing Marty, 209 Md. at 216-17, 120 A.2d at 844) (emphasis added). Generally, that intent is gathered from th e four c orners o f the w ill, Reedy v. Barber, 5 The parties have not directed us to, and we have not f ound, any ca ses of this Court expressly stating th e stand ard of r eview for app eals fro m the O rphans Cour t. Cf. Hall v. Morris, 213 Md. 396, 402, 132 A.2d 113, 116 (1957) (noting that in prior decisions, the Court has held tha t the judgm ent of the O rphans' Co urt on a disp uted ques tion of fac t, litigated by adversary pro ceedings, sh ould not be reversed unless c learly erroneous); Shapiro v. Marcus, 211 Md. 83, 88, 124 A.2d 846, 849 (1956) (noting that there is a presumption when an appeal is taken from an Orphans' Court of the correctness of that court's decision on a disputed question of fact where such a question has been litigated by adversary proceedings). Nevertheless, under the circumstances of this case, we see no need to deviate from the standard of review that we hav e applied to interpretations and conc lusions of la w by courts of general jurisdiction. 5 253 Md. 141, 148, 251 A.2d 882[, 887] (1969), with the words o f the will giv en their plain meaning and import. Emmert, 309 Md. at 23, 522 A.2d at 380 (quoting Leroy, 262 Md. at 280, 277 A.2d at 613). Words ha ving legal significance, how ever, will be construed in that sense unle ss the will clearly indicates otherwise. Emmert, 309 Md. at 23, 522 A.2d at 380 (citing Patchell v. Groom, 185 M d. 10,15 , 43 A.2 d 32, 35 (1945 )). In Johnson v. Hall, 283 M d. 644, 392 A.2d 11 03 (1978 ), this Court w as asked to resolve who, as between the residuary legatee and the beneficiaries named in the last will and testament at issue, has the obligation for the payment of the federal estate taxes assessed on the worldly goods owned by the testatrix at the time of her death. Id. at 645-46, 392 A.2d at 1105. Maryland Code (1974), § 11-109 of the Estates and Trusts Article required federal and Maryland estate taxes to be apportioned a mong all perso ns intere sted in th e estate, unless otherwise provided in the will. 6 The personal representative, apparently in reliance on this provision, sought the permission of the Orphans Court to apportion the estate taxes 6 Maryland Code (1974) § 11-109 of the Estates and Trusts Article (the current version of this statute is found in Maryland Code (1988, 2004 Repl.Vol.), § 7-308 of the Tax-General Article), as relevant, provided: (b) Persons a mong w hom tax to be apportioned. The (federal and Maryland estate taxes) shall be apportione d among all persons in terested in the estate. The apportionment shall be made in the proportion that the value of the interest of each perso n interested in the estate bears to the total value of th e interests of all persons interested in the estate. * * * * (k) Applicability. Except as otherwise provided in the will, or other controlling instrument, the various provisions of this section sh all apply to the apportionment of, and contribution to, the federal and Marylan d estate t axes. 6 due in respect to th e testatrix s dea th among all of the beneficiaries named in the w ill. Id. at 646-47, 392 A . 2d at 11 05-06 . Two of the beneficiaries opposed such an order. They relied on that prov ision of the te statrix s will that d eclared: I direct that all lawful debts I owe at the time of my death, including funeral and administration expenses and the expense of my last illness (but not including debts secured by mortgages on real property, except matured obligations as they fall due), and all estate and inheritance taxes, be paid as soon a fter my d eath as c an law fully and conve niently be done. They argued that this provision expressed the intention of the testatrix that the burden of the taxes be borne by the residuary estate. Id. at 647, 392 A.2d at 1105. The O rphans Court rejected the beneficiaries argument and entered an order apportioning the taxes, pro rata, among all of the beneficiaries, a ruling that was reversed by the Court of Special Appeals. Hall v. Johnson, 38 M d. App . 589, 38 2 A.2d 332 (1 978). Agreeing with the Orphans Court, we reversed the judgment of the intermediate appellate court. At the outset, we pointed out that § 11-109 envisioned the supremacy of the intention of the testato r or testatrix, as ref lected in the la nguage o f the will, stating that its application of the rule o f apportion ment set ou t in subsec tion (b) is mand atory, unless the will evinces an expression of intent to the contrary, Johnson v. Hall, 283 Md. at 648, 392 A.2d at 1106 (emphasis in original), and noted its consistency with, thus reiterating and emphasizing, the firmly establishe d rule [7] that, unless prohibited b y statute or public policy, 7 This rule has bee n firmly established for over 170 years. In Creswell s Lessee v. Lawson, this Court stated: [I]t is also settled, that where the intent of the testator is ap parent, no word (continued...) 7 the intent of the testator as ascertained from the four corners of the will controls the disposition of a decedent s estate. Id. at 648-49, 392 A.2d at 1106. We also observed: under tax apportionment statutes an intention not to apportion must be plainly stated in the will or other controlling instrument before the legislative scheme can be ignored. . . . In examining a will for the purpose of fixing estate tax responsibility, the court sh ould not try to disc ern wha t the testator me ant to say, but what he meant by what he did say, for a few simple words, which need not be couched in terms of a negative direction against apportionment, will be suffici ent if the y demon stratively e xpress the testa tor s inte nt. Id. at 649, 3 92 A.2 d at 110 6-07 (c itations o mitted). We held that the language of the will, on which the beneficiaries relied, did not sufficiently express the intention of the testatrix that the estate taxes be paid in a manner different from, or otherwise than, that required by § 11-109. We explained: Accepting the premise, as all courts on both sides of this controversy do, that a statute directing apportionment will only be ignored if the testator clearly and unambig uously indicate s that to b e his inte ntion, we fail to see how the first clause, whether read in isolation or examined in the context of the entire w ill, in any way expresses Dr. Joh nson s desire that all the beneficiaries should not share proportionately the bite of the federal estate tax. Id. at 652, 392 A.2d at 1108 (footnote omitted). Further elucidating, the Court stated: We recognize, of course, that our failure to give the language of the first clause the im port respon dents assert it deserves re legates it to little more than a re stateme nt of the statutory d uties of the exe cutor. . . . Yet, we do not think this interpretation in any way vitiates the rule of construction that words in a will are never to be rejected as meaningless or repugnant if by any reasonab le construction they may be giv en effect a nd made consistent and 7 (...continued) shall be add ed or dr opped , to defeat su ch intention ; which m ust prevail, if it can be carried into eff ect with out vio lating so me settle d princ iple of la w. 7 G. & J 227 , 248 (1835) (emp hasis added). 8 signific ant. . . . Simply because the words of the will restate the law or add nothing of substance to what would have occurred without them does not deprive those words of their effe ct for they are indicative of the testator s intent and must be respected a nd carried o ut indepen dently of any pa rallel, consistent provisions of the law. . . . Further, the logic of respond ent s argument that by mentioning taxes the testatrix must have intended something other than what the law provides requires that they likewise be able to assign some special role, oth er than one parroting the law, to the re mainder of th e words of the first clause directing payment of expenses and debts. This they make no eff ort to do . No magic or mystical word or phrase is required to shift the burden of estate taxes f rom the leg atees and d evisees to the residue; however, for us to recognize that the testatrix s ritualistic, boiler plate re ference to the payment of debts, expenses, and taxes in the first clause of her will states an intent not to apportion would require that we be clairvoyant. In short, we detect no direction by the decedent in the first paragrap h of her will not to apportion taxes as section 11-109 provides. Id. at 654-55, 392 A .2d at 1109-10 (citations om itted) (footnote omitted). Bouse v. Hutzler, 180 Md. 682, 26 A.2d 767 (1942) is to li ke effect. In that case, involving calculation of inheritance tax when a testator directs that it be paid from the residuary estate, we commented: The Maryland in heritance tax is imposed on the privilege of becoming a beneficiary under a will or of succeeding to an inheritance. Under the Maryland statute, the executor, administrator, or other person making distribution is charged with the payment of inheritance taxes to the Register of Wills for the use of the State. Code 1939, Art. 81, Sec. 112.[8] 8 The current vers ion of that statute is Maryland Code (1988, 2004 R epl. Vol.), § 7-216 o f the Tax -Genera l Article. It reads , in relevant pa rt: § 7-21 6. Person required to pay tax; source. (a) In general. - (1) Except as otherwise provided in this section, the inheritance tax on prope rty that passes from a deceden t shall be paid, before it is distrib uted , by the pers on w ho distrib utes the p rope rty. (2) The person who distributes property that passes from a decedent (continued...) 9 Howev er, since the tax is a charge against each distributive share according to its value, the executor, administrator or other person must pay the tax out of the legacy, devise, or distributive share of th e estate or w ith money collected from the lega tee, dev isee, or h eir. Of course, a testator has the right to direct that the tax be paid out of the residuary es tate. In case he so directs, he thereby increases his gift to the legatee to the extent of the tax, for he is providing for the payment of an obligation which the legatee would have been obliged to pay if the tes tator had not dire cted oth erwise . . . . Bouse, 180 Md. at 685, 26 A.2d at 768-69 (citations omitted) (emphasis added). Once again, w e recog nized th e testato r s inten t as para moun t. So, too, is Smith v. S tate, 134 Md. 473, 107 A. 255 (1919). That case involved the exercise by the testatrix of a power of testamentary appointment reserved to her when she executed a deed of trust, declaring certain trusts. In the will executed in the exercise of the reserved power, and a codicil executed subsequently, the testatrix directed her executor to: 8 (...continued) is liable for the inheritance tax on the property distributed until the tax is paid. (3) Unless a decedent specified a source for paying the inheritance tax and there is sufficient money from that source, the court may order sale of property to pay the inheritance tax on the proper ty. The statute now in effect inferentially acknowledges the importance of the testator s intent with respect to the sourc e of fund s to be used to pay various taxes relating to estates. In § 7-216(a)(1), there is a requirement that inheritance taxes be paid before distribution. When this requirement is read in conjunction with § 7 -216(a)(3), which auth orizes a court to order the sale of property in order to satisfy the tax if it is not paid by a source specified by the decedent, the importance of the testator s intent is clear. Accordingly, not only do our preceden ts supp ort th e power of te stato rs to d irect the sourc e of f unds for the p ayment of inheritance taxes, but the statutory scheme recognizes the same power by limiting the authority of courts to order the sa le of other p roperty (even w hen the tax es are not tim ely paid) so long as the source designated by the testator is sufficient to pay the taxes. 10 [P]ay all collateral or other inheritance taxes out of my estate, to the end that each legatee above named may receive, free of any such tax the full amount of his or her legacy hereinbefore given. [P]ay out of the residue of my estate any and all collateral, inheritance, succession, or other like tax or taxes, federal, state or municipal, upon each of the legacies given and bequeathed both in this codicil an d in my said w ill, to the end that each legatee named may receive free of any tax the full amount of his or her respective legacy. 134 Md. at 477, 107 A. at 256. The court below having passed a decree requiring the payment of taxes on estates, real, personal and mixed, money, public and private securities for mone y of ever y kind . . . tran sferred by . . . will, out of the residuary estate, rejecting the argument made by the testatrix s executor that no taxes were payable or they were the responsibility of the legacies, 134 Md. at 478, 107 A. at 257, the execu tor appeale d. This Court aff irmed the d ecree. On the issue of where th e burden of the taxe s fell, we said : The remaining question which was suggested by the argument was the fund from which the money was to be paid, if the tax was valid. It is entirely clear what the intent of th e testatrix was from the quotation made already from her will and codicil. It is true that the decree appealed from might have been a little clearer in its phra seology, but tha t is a verbal m atter only, and w ill occasion no practical difficulty in the conduct of the executors and trustees . Id. at 480, 1 07 A. a t 257-5 8. It is clear that the testamentary language used by the tes tator in the cas e at bar clearly expresses the testator s intent that any, and all, inheritance taxes were to be paid from the residuary estate and were not to be apportioned among, or deducted from, the shares of the individual residuary legatees. Necessarily, therefore, the testator must have intended that the amount of the residuary shares to be distributed would be determined based on the value of 11 the residuary estate after the taxes had been paid, off the top, out of the estate; it was the clear intention of the testator that each individual share of the residuary estate be determined after the taxes were paid on the entire estate, albeit from the residuary estate. Thus , it is immaterial that under the T ax Cod e, some of the legatees w ould not h ave been obligated, in any event, to pay taxes on their share; they are, in reality, not being taxed on their residuary share, nor is any residuary legacy being reduced. As we have said, the intent of the testator, as ascertained from the language of the will, controls the source of the funds to be used to pay inheritance taxes so long as th ere is no conflict with the applicable statute, other law or public policy. See Johnson, 238 Md. 648-49, 392 A.2d 1106-07. There is no conflict in the case at bar. The testamentary language at issue clearly designates the fund from which the inheritance taxes due in this case were to be paid - from the residuary estate - and also when the payment is to be made - prior to apportionment among the residuary legatees. To be sure, the will provision at issue sub judice is similar to the will provision at issue in Johnson v. Hall; they both referen ce vario us deat h taxes and du ties, although th e provision in the latter is broader, including, in addition to taxes, debts and expenses, and the intention of the testato r that they be paid , and, thus, the o bligation of the personal representative with regard thereto. But they differ significantly, as well. The provision sub judice not only directs the payment of the taxes, it states how the payments are to be treated, as an expense of the administration of my estate without apportionment. While the provision in Johnson also directs payment, it does so only with regard to the timing of the 12 payment of the taxes. In Johnson, we characterized as ritualistic and boiler plate, id. at 655, 392 A.2d at 1110, the will s reference to debts, expenses and taxes. The Orphans Court s analysis gives that characterization a significance it does not h ave and th at certainly was never intended. In so characterizing the reference, we simply stated that it was insufficient to expres s the inte ntion att ributed to the tes tatrix by the benef iciaries. The Court did not say, nor did it mean to suggest, th at boiler plate languag e can nev er be suff iciently clear to e xpress an inten tion of th e testato r contra ry to the ap portion ment sta tute. Cases from ou r sister jurisdictions ge nera lly are in accord. In Matter of Estate of Cline, 258 Ka n. 196, 898 P.2d 643 (1995), the te stator s will pro vided that: All estate, inheritance, legacy, succession, excise or transfer taxe s . . . with respect to all property taxable . . . by reason of my death . . . and whether such taxes be payabl e by m y estate or by any recipien t of any such p roperty, shall be paid by my Executor out of my general estate as part of the expense of the administration thereof with no right of reimbursement from any recipient of any such property. 258 Kan. at 198, 898 P.2d at 645. The residuary legatees, claiming that the will under review was ambiguo us, argued that the taxes o n the residu ary estate should be apportioned among the residuary legate es. The trial co urt declined to require ap portionment. The Supreme Court of Ka nsas af firmed . Having framed the competing positions of the parties, it expressed the relevan t principles of law, as follo ws: The residuary beneficiaries contend that Cline s will is ambiguous because it does not clearly state an intention that the entire estate and inheritance taxes be paid out of her residuary estate. . . . The Bank asserts that Article I of Cline s will directing the payment . . . from my general estate was a c lear 13 and unambiguou s expression of C line s intent that the taxes be paid out of her residua ry estate. Where the lang uage of a will is clear, definite, and u nambiguous, the c ourt should not consid er rules of jud icial construc tion to determine the intent of the testator. In the interpretation of wills, the primary function o f the court is to ascertain the testator s intent from the four corners of the will and to carry out that i nten t if po ssible an d not con trary to law or pu blic p olicy. * * * * The language in Cline s will states an intention to exonerate all property passing as a result of Cline s death and that the taxes be paid out of her estate. Id. at 199- 207, 89 8 P.2d at 646- 650 (ci tations o mitted). In re Robb ins Estate, 116 N . H. 248 , 356 A .2d 679 (1976), addressed the question whether the tax due the State of N ew Ha mpshire u nder RS A 86:6 [9][is] to be paid as directed in Article Sixth of the will, or is it to be paid by receiving from each legatee and devisee an amount equal to the tax assessed upon each legacy and d evise, pursu ant to RSA 86:60. Id. at 248-49, 356 A .2d at 680. Article Sixth of the testator s will directed the testator s executor to pay any and all inheritance taxes . . . from the residue of my estate insofar as the same may be sufficient to pay the same. Id. at 249, 356 A.2d at 681. The cou rt held [t]he answer to the second question is that the taxes due the State of New H ampshire pursuant to RSA 86:6 ar e to be p aid as d irected in Article S ixth of th e will. In re Robbins Estate, 116 N .H. at 25 0, 356 A .2d at 68 2. 9 R.S.A. 86:6 was New Hampshire s apportionment statute, its version of § 11-109, then in effect. It was repealed in 2002. 14 In Matter of Estate of M orris, 838 P.2d 402 (M ont. 1992), [t]he question before the Court [was] whether the will provide[d] a method of apportioning state inheritance taxes different from that set out in the statute. Id. at 404. To answ er this question, it was necessary that the cou rt determine if the trial court erred in holding that the testatrix s testamentary intent, as exp ressed in [h er] will was suff iciently clear so as to overcome the statutory directive as to apportionment of state inheritance taxes. Id. at 369-370. The applicable statute was § 72-16-603, MCA, which, as relevant, provided: (1) Except as provided in subsection (3) and unless the will otherwise provides, the tax shall be apportioned among all persons interested in the estate. The apportionment is to be made in the proportion that the value of the interest of each person interested in the estate bears to the total value of the interests of all persons intereste d in the e state. The values used in determining the tax are to be used for that purpose. (2) If the decedent s will directs a method of apportionment of tax different from the method described in this part, the m ethod des cribed in the will contro ls. One paragraph of the testatrix s will stated: I direct my Perso nal Repre sentative . . . to pay all of my just debts, my funeral expenses, the expenses of administering my estate, and all taxes both State and Federal which becom e paya ble by reason of my death, out of my estate. The Mon tana Su preme conclu ded tha t this lang uage, th is directio n, is clea rly suffici ent, id., to contr ol the m ethod o f appo rtionme nt. See also Matter of Estate of Keenan, 519 N.W.2d 373, 378 (Iowa 1994) (holding that similar language was also sufficient to enforce the testator s intention to have inheritance tax es paid out of the gen eral estate). 15 In re Estate of Ross, 815 A.2d 30 (P a. Commw . Ct. 2002), addressed w hether there remained any estate after taxes to be passed o n to the residuary legatees na med in the will (the court noted that [t]his case involves a dispute regarding the proper rate of Pennsylvan ia Inheritance Tax to be app lied to a r esidua ry estate. ). Id. at 32. Addressing that issue, the court, after se tting ou t the relev ant por tion of th e will, i.e., Provision of Taxes: I direct that all . . . inherita nce . . . tax es . . . on the pro perty passing u nder this m y Will . . . shall be paid out of the principal of my general estate to the same extent as if such taxes were expenses of admin istration a nd all . . . de vises an d other gifts . . . shall be free and clear thereof, observed, [i]t is clear that Decedent made the decision that any taxes due we re to be paid out of the residuary estate. Id. at 33. A different P ennsylvania c ourt reache d a similar co nclusion in a case where the relevant provisio n in the w ill provid ed that: All . . . taxes . . . shall be paid out of the principal of my residuary Estate just as if they were my debts[.] In re Estate of Jones, 796 A.2d 1003, 1 004 (P a. Supe r. Ct. 2002) (bolding removed). Agreeing with the Orphans Court that the tax clause of [the testator s] Last Will and Testament controlled and required that all . . . inheritance taxes be paid by the residuary estate, id. at 1005, the court held that the tax clause in the Will was sufficiently clear and specific [enough] to overcome the statutory scheme for appo rtionment o f estate and inheritance taxes. Id. at 1006 . See also Matter of Will of Herz , 206 A.D.2d 283, 287, 614 N.Y.S.2d 514 (1994) (Kupferman , J. dissenting) ( That inheritance taxes may be paid, as directed in the Will, out of the residuary 16 estate, even where under the statute imposing the tax such tax wou ld ordinarily be p ayable by the legatee out of the legacy received is well established [.] (quotations om itted). The United States Tax Court has also con strued similar testamentary language with respect to estate taxes in like fashion. In Estate of Fine v. Commissioner of Internal Revenue, 90 T. C. 1068 (1988), that court said: Absent a controlling Federal statute, State law determines what property will bear the burden of the Federal estate tax. . . Virginia, like most other states, has enacted an apportionment statute, providing for the proration of estate tax liability among the beneficiaries of an estate in proportion to the relative values of the interests received. * * * * Decedent s will expressly provides that estate and inheritance taxes are to be paid out of his residuary estate without apportionment. Con sequ ently, the Vir ginia ap portion ment sta tute doe s not ap ply. The underlying principal in the construction of wills is that the intent of the testator, if it is legal and can be determined, must control. Id. at 1072-73 (citations om itted). IV. The clearly expressed intent of the testator, in the case sub judice, is that an inheritance taxes are to be paid by the residuary estate without ap portionme nt. Even if the language we re boiler-plate, it sufficiently expressed the testator s intention to require that inheritance taxes were to be paid from the residuary estate prior to apportionment. The fact that a statu te im pose s no t ax burde n on certa in cla sses of re sidu ary legatees is immaterial. Under the circumstances here present, the payment of inheritance taxes relating to appellant s residuary share is an additional gift to him from the testator, not an additional 17 burden on the ex empt leg atees. On re mand, the Orphan s Court shall direct that the inheritance taxes due are to be pa id from the residuary estate prior to distribution to the residuary legatees. JUDGMENT OF THE ORPHAN S C O U R T F O R M O N T G OM E R Y COUNTY IS RE VER SED . CASE REMANDED TO THAT COURT FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS TO BE PAID BY THE APPELLEE. 18
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