
    Matter of the Collateral Tax upon the Estate of John B. Hall, Deceased.
    (Surrogate’s Court, New York County,
    December, 1901.)
    Transfer tax — Valuation of shares in remainder where the fixed income of the life beneficiary has necessarily encroached upon the corpus.
    Where a testator dies in 1889, wills his wife a fixed income for life payable out of his residuary estate, gives the trustees, thereof power to use the principal to make the income up to the amount fixed, and they necessarily invade the principal until her death eleven years later, the shares of the remaindermen, now for the first time vesting in enjoyment and fixed by a decree upon the trustees’ accounting, are to be appraised at their amounts as shown in the decree, and a computation of their value, reached by taking the value of the testator’s estate at the time of his death and deducting therefrom the theoretically probable, and not the actual, duration of the wife’s life estate, is erroneous and unjust.
    Appeal from the report of an appraiser appointed to assess the transfer tax.
    William W. Bryan, for trustee.
    Knevals & Perry, for legatees.
    A. S. Tompkins, for comptroller.
   Thomas, S.

The testator died April 21, 1889. By his will, after providing for an annuity of $20 a month to a stranger, he gives his residuary estate in trust to his executors, to pay' the income to his wife for life. If the income is insufficient to realize $5,500 a year, they are directed to invade principal to make up that amount. Upon the death of his wife, after bequeathing certain specific sums of money, the remainder is directed to be divided equally between the children of certain relatives by marriage. In 1895,. prior to any accounting, an appraiser was appointed who made certain investigations and computations, and reported that the interest of the widow was not taxable and that the rights of the other legatees would not vest in enjoyment until after the death of the widow, and that it was not yet ascertainable to whom the estate would pass upon her death, and that he had left them for future appraisement after her death. The widow died November 29, 1900, having lived eleven years and seven months after the testator, and having received $5,500 per annum, which amounted to $63,666.43. An accounting was had in this court and a decree made on June 10,1901, which approves the accounts of the trustees and fixes the shares of the residuary legatees. This proceeding was commenced by the State Comptroller immediately after the making of that decree. In the decree the shares of the legatees, taking the residuary estate, are $6,520.33 each, payable June 10, 1901. By the report of the appraiser a tax is imposed against each of them on the sum of $5,638.81, on the theory that each legacy was worth that sum on April 27, 1889, the day of the death of the testator. There is a manifest error here, since the difference is plainly not enough to cover interest for over eleven years. The discrepancy between the computations and the facts is caused by the fact that the appraiser started with the appraised value of the estate at the time of the death of the testator, and deducted only the estimated value of the annuity to the widow, based upon the accepted tables of probable mortality. The widow was sixty-nine years of age at the death of her husband, and at that time her chance of life was less than six years. She actually survived him about twice as long as that. The statute of 1887 (chap. 713) required a life estate sought to be taxed to be appraised on this theory, notwithstanding it resulted in error (Matter of Jones, 28 Misc. Rep. 356), but I do not find myself bound in this way in estimating the value of a legacy, now just due, and the actual value of which now appears without contradiction and is fixed by a decree. If the widow had lived long enough the estate would have been entirely consumed by her annuity, and a ruling which would require a tax to be imposed against the residuary legatees, even if they had never been entitled to any sum whatever, should be avoided. The proceeding before the appraiser appointed in 1895 was never ratified by any order of a surrogate. The report of the appraiser was not an adjudication of any kind, and some error has been made by adopting some of the estimates there formed instead of accepting the facts as shown. The valuations of the legacies now sought to be taxed, as of the date of the death of the testator should be computed from the amounts adjudged in the decree on the final accounting as being their value at the date of the decree. The appeal is sustained and the matter remitted to the appraiser for a further report.

Appeal sustained and matter remitted to appraiser for further report.  