
    Matter of the Estate of John L. Cadwalader, Deceased.
    
      (Surrogate’s Court, New York County,
    
    
      July, 1916.)
    Executors and administrators—Duties of testamentary ' trustees DISTINGUISHED-TRANSFER TAX—WHO ENTITLED TO COMMISSIONS-Trusts—Trustees.
    Where the various powers and duties devolving upon testamentary trustees as distinguished from executors* show that testator intended that their duties should be distinct and separate and that when their duties as executors terminated and as trustees began was when the debts and general legacies had been paid and the residue of the estate divided. in accordance with the will, they are entitled to commissions in each capacity.
    Where the income of trust funds was directed to be paid to certain persons for life, the .remainder at their death to be paid to .such persons as the life beneficiaries by their respective last wills should designate and appoint, the commissions that may be deducted in a transfer tax proceeding must be limited to full trustees ’ commissions for' receiving the various trust funds, the. taxation on the remainder being suspended; if the power of appointment be exercised by the respective donees of the " powers the trust funds will be taxed as part of the estates of the persons exercising the powers of appointment, and trustees’ commissions for paying out the tru t funds may be deducted in the transfer tax proceeding brought to assess a tax upon the respective estates of the donees of the powers.
    Appeal from an order fixing and assessing the transfer tax.
    Cadwalader, Wickersham & Taft, for executors appellant.
    Lafayette B. Gleason (Schuyler C. Carlton, of counsel), for State Comptroller.
   Fowler, S.—

The executors and trustees of decedent’s estate appeal from an order assessing a tax upon the interests of the legatees, and contend that the appraiser erred in refusing to deduct full commissions for two trustees from the assets of the estate. The appraiser deducted executors’ commissions for receiving and paying out the entire estate.

The testator, after making a large number of general bequests, directed that the residue of his estate be divided into equal shares, one for each brother and sister surviving him, and one for the issue, collectively, of any brother or sister who died before him. He further directed his trustees to pay one share to his sister, to hold one-half of another share in trust for his brother during his life, with remainder to such persons as his brother appointed in his will; and as to the other one-half of said share, to. divide it into as may parts “ as there shall be children or the issue of children of my said brother me surviving,” and to hold such shares in trust for and during the respective lives of the cestuis que trustent, and on their respective deaths to pay over and transfer the corpus of the trust funds to such persons as the life beneficiaries by their respective last wills should designate and appoint. As to another share the testator directed his executors to hold two-thirds part in trust for his sister and to pay the remainder to such persons as she, by her will, may appoint; and to hold the other one-third of the share in trust for the daughter of the said sister during her life, and to pay the remainder to the appointees mentioned in her will.

In the sixth paragraph of his will the testator directed that his executors shall have power to divide his estate and to' apportion cash, real estate or securities to the several shares into which he directed that his residuary estate be divided, at "values to be' fixed by them. In a subsequent subdivision of that paragraph he authorized his trustees to make actual partition' of his real estate between the trusts created by his will, and to sell or mortgage any'real estate held in trust. He also authorized his executors and trustees to transfer any of the trusts created by his will to a trust company in the city of ¡New York or in the city of Philadelphia.

It is manifest from the provisions of the will that the testator intended separate duties for his executors and trustees, and that the time when their duties as executors terminated and their duties as trustees began was when the debts and general legacies had been paid and the residue divided into shares or portions in accordance with the terms of the will. Separate trusts are to be formed for the benefit of testator’s nephews and nieces, and the trustees are authorized to invest the principal of the trust funds held by them in such securities as they may deem proper. These various powers and duties devolving upon the trustees as distinguished from executors show that the testator intended that their duties should be distinct and separate. They are therefore entitled to commissions in each capacity. (Laytin v. Davidson, 95 N. Y. 263.)

As the remainders after the various life estates are suspended from taxation in this proceeding because of their being subject to a power of appointment, and the only taxable interests are the life estates, the trustees’ commissions to be deducted from the various trust funds created by the will of the testator are those allowed by law for receiving the trust funds. If the power of appointment is exercised by the respective donees of the powers the trust funds will be taxed as part of the estates of the persons exercising the powers of appointment, and trustees’ commissions for paying out the trust funds may be deducted in the transfer tax proceeding brought to assess a tax upon the respective estates of the donees of the powers. But so long as taxation on the remainders is suspended in this proceeding, the commissions to be deducted must be limited to full trustees’ commissions for receiving the various trust funds.

The order fixing tax will be reversed, and the appraiser’s report remitted to- him for correction as indicated.

Order reversed.  