Debts Due New York Creditors.

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other States, or the entire charges for mortuary purposes incurred after the death of the decedent. An allowance must, however, be made of such portion of the debts, owing to creditors domiciled elsewhere, and for funeral charges and expenses incident to burial as the New York assets bear to the entire estate."

599. Debts Owing Resident Creditors Must Be Deducted from Property of Nonresident in This State.

The property of a nonresident decedent within this State is applicable to the payment of the decedent's debts, and the surrogate is required to direct the person to whom ancillary letters have been issued to pay out of the avails of the property received by him the debts of the decedent due to creditors residing within this State. That when the debts of the nonresident decedent due to creditors residing within this State equals or exceeds the decedent's property within this State, there is no transfer of property upon which a tax is imposed. Matter of Grosvenor, 124 App. Div. 331; same case, 126 App. Div. 953; affd., 193 N. Y., mem. 56, on authority Matter of King (71 App. Div. 581, affd. on opinion below 172 N. Y. 616).

In view of the foregoing decision, it would seem that debts due New York creditors only should be allowed as a deduction from the avails of the property within this State, as there is no apparent reason for allowing a deduction of all debts due New York creditors, and also a proportionate part of the other debts of the decedent, from the property within this State. 600. When Certified Copy of Foreign Decree, Basis upon Which to Fix Deductions.

Where in transfer tax proceedings upon the estate of a nonresident a certified copy of the order or decree

of the Probate Court of decedent's late residence is presented to the appraiser showing that the value of decedent's personal estate with which the executrix is charged is $38,712.88 since the decree is the best evidence before the appraiser as to the value of the entire personal estate, it must be taken as the basis upon which to fix the deductions to be made from the estate in New York. Matter of Griswold, N. Y. Law Journal, November 21, 1908. Surrogate Thomas.

601. Doubtful Claims.

The tendency of the decisions in transfer tax cases has been to follow the rule that where there are claims which are doubtful, their assessment must be expressly reserved, or if such claims are allowed or disallowed in the first hearing, the remedy of the party aggrieved must be by appeal. Matter of Connoly, 38 Misc. Rep. 466, 77 N. Y. S. 1032; Matter of Rice, 29 Misc. Rep. 404, 61 N. Y. S. 911; affd., 56 App. Div. 253, 68 N. Y. S. 1147; Matter of Wallace, 28 Misc. Rep. 603, 59 N. Y. S. 1084. But see Matter of Dimon, 82 App. Div. 107, 81 N. Y. S. 428, as to late practice in this respect.

602. Value of Particular Estate.

In appraising a legacy given in remainder after the death or remarriage of life tenant the value of the particular estate is to be deducted from the principal of the fund. Matter of Sloane, 154 N. Y. 109.

603. Present Value of an Annuity.

It is proper in calculating for the purpose of the transfer tax, the present value of the widow's life estate in decedent's residuary estate, which is also subject to an annuity of $200, to be paid decedent's sister for life, to deduct from the net value of the personal

property, the present value of the annuity, instead of deducting the actual amount of principal necessary to produce the annuity at the rate of 5 per cent. per Matter of Maresi, 74 App. Div. 76, 77 N. Y.

annum.

S. 76.

604. When Cost of Annuity a Proper Deduction.

Where decedent gave his two sisters an annuity for $2,000 and $4,000, respectively," requesting his executors to arrange for these annuities" through certain specific insurance companies, and it appears that the cost of said annuities was upward of $19,000 more than their present value, as shown by the computation of the Superintendent of Insurance, Surrogate Thomas has held (In re Hutchinson, N. Y. Law Journal of January 13, 1905), that the cost of the annuities should be deducted from decedent's residuary estate, and not the present value, as shown by the Superintendent of Insurance. The surrogate states that the annuities are regarded as legacies of the sums actually paid for them. (Distinguishing Matter of Maresi, 74 App. Div. 76; Matter of Tracy, 179 N. Y. 501); affd. by the Appellate Division, First Department, 105 App. Div. 487.

605. Apportionment of Debts, etc., between Exempt and Nonexempt Personal Property.

Where the personal estate of a decedent consisted in part of exempt government bonds, the debts, expenses, etc., should be apportioned ratably between the bonds and the other taxable personal property for the purpose of estimating the taxable value of the succession. Matter of Purdy, 24 Misc. Rep. 301, 53 N. Y. S. 735. (Decision under Act 1892.)

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Debt Barred by Statute.

606. Effect of Directions in Will to Pay Debt Barred by Statute of Limitation.

The seventh clause of a decedent's will contained the following provision: ،، Seventh; my son-in-law, Louis Blum, having advanced to W. J. Schloss & Company the sum of fifteen thousand dollars ($15,000) which resulted in a loss, one-half of which loss I agreed to bear, I direct my executors to pay him, the said Louis Blun, one-half of the loss on the principal sum so sustained by him, or of so much as shall be due to said Blum. In the appraisal of the decedent's estate a demand note for $7,500 dated June 28, 1894, and payable to the order of the said Louis Blum with interest was produced and shown to be a note given by decedent to pay one-half of the loss resulting from the loan above mentioned. No payment on account of either principal or interest had been made on this note, and at decedent's death, October 26, 1901, the Statute of Limitations had run. Surrogate Thomas held that the direction given by the testator in his will for the payment of the debt was a sufficient acknowledgment to remove the bar of the Statute of Limitations. Matter of Levy, N. Y. Law Journal, May 15, 1907; affd., 122 App. Div. 919.

607. Claims, etc., Not Allowed - Expenses of Unnecessary Action.

Executors should not be allowed for expenses in an action unnecessarily brought by them, both individually and in their representative capacity, for a construction of the will. Matter of Thrall, 30 App. Div. 271, 51 N. Y. S. 395; modified in other respects, N. Y. 46.

157

Counsel Fees When Not Allowed.

608. When Debt Not Allowed.

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Where time for creditors to present claims to executor has expired and the creditor testifies that he does not intend to enforce the collection of his claim, the appraiser should not allow it as a deduction. Matter of Schwartz, N. Y. Law Journal of February 17, 1903. 609. When Commissions Not to Be Deducted.

Where the testator directed that no compensation or commission as such shall be paid to any living executor or trustee under his will for any services as executor or trustee, the amount of commissions to which executors are usually entitled should not be deducted in ascertaining the taxable value of the estate. Matter of Vanderbilt, 68 App. Div. 27, 74 N. Y. S. 450; revd. on another point, 172 N. Y. 69.

610. Counsel Fees, When Not Allowed.

In the Matter of Westurn, 152 N. Y. 93, the will of decedent has been declared void, and the costs and allowances to the successful contestants (who were the sole next of kin and heirs-at-law of decedent), were directed to be paid out of the estate and it was therefore contended that the expenses of this litigation should be deducted from the estate before computing the transfer tax. The Court of Appeals held otherwise, saying: "The fact that the appellants were put to expense in asserting their rights and were embroiled in expensive litigation to obtain them was their misfortune. It did not diminish the value of the interests which devolved upon them on Westurn's death. It was a loss, but a loss to their general estate. It did not prevent them receiving the whole interest transmitted to them. The fact that the court charged certain costs