§ 220 Diminishing Vested Interests. execution of the power.' (See §§ 40 and 41 of Art. 3, Chap. 50, of the Consolidated Laws, being Chap. 52 of the Laws of 1909.) Clemence H. Crafts was a person in being who would have an immediate right to the possession of the property on the determination of the precedent estate, and her interest was, therefore, a vested remainder. The existence of the power of appointment could have no effect upon this vesting. Section 31 of the Real Property Law, before referred to, was a statement of the common law as it existed prior to its passage. (Root v. Stuyvesant, 18 Wend. 257.) In that case it is said: 'It appears to be well settled that until the execution of the power the remainders or limitations over take effect the same as if no such power existed, or as in case of default of execution of it. * That under this provision of the Real Property Law Clemence H. Crafts had a vested remainder is sustained by the authorities.' (See Knowlton v. Atkins, 134 N. Y. 313.)" Having determined that Clemence H. Crafts took a vested remainder in this fund under the will of her father, subject to be divested by the life tenant leaving issue, or by the exercise of the power of appointment, it is clear that under the Lansing case she has the right to elect to take her title from her father's will, as the will of Mrs. Shaw merely continues the title where it was previously vested without adding to or taking anything therefrom. 205. Effect of Diminishing Vested Interests Subject to Exercise of Power of Appointment. Where the interest of four great-grandchildren in a trust fund vested upon the death of their great-grandfather, subject to the contingency of being divested by the exercise of the power of appointment by their father, and the father in his will exercised such power by bequeathing said trust fund to his wife and four Situs of Property Immaterial. § 220 children, share and share alike, the father did not divest four-fifths of the interest of the great-grandchildren. Their interests, respectively, were not increased but diminished by the one-fifth bequeathed to his wife, and instead of being benefited their interests were injured by the exercise of that power, and the court can find no justification either in law or equity to disturb the order of the surrogate which taxed only the onefifth of said trust fund passing under the power of appointment to the widow. Matter of Ripley, 122 App. Div. 419; affd., 192 N. Y. 10, mem. 206 When Power Is Exercised by a Resident, Situs of Property Immaterial. The liability of property to an inheritance tax does not depend upon the location of such property, but upon whether the beneficiary came into possession thereof through the exercise of a privilege conferred by the State, and there is no distinction made in this respect between real and personal property. In the Matter of Hull, 111 App. Div. 322; affd., 186 N. Y. 586, it appears that the testator's mother died in 1874, a resident of New York county, leaving a will giving her son Wager J. Hull, the testator, the income of four-thirteenths of her estate for life, with power to him to appoint the principal. At the death of testator's mother the four-thirteenths of her estate consisted of an undivided interest in real estate belonging to her father in New Jersey, but before the death of Wager J. Hull, in 1902, the real estate had been converted into cash, and at the time of his death it had been invested in bonds and mortgages on property in New Jersey. Wager J. Hull died a resident of Westchester county, leaving a will exercising the appoint § 220 Power Exercised by Nonresident. ment in favor of his wife, and the trustee in the State of New Jersey, pursuant to said appointment, paid to testator's widow the proceeds of the fund, amounting to upwards of $26,000. The court holds that the testator's widow gets all her rights in and to the property by reason of the exercise of the power, which is a privilege granted by the State of New York, and she may not be relieved from the obligation of paying a transfer tax thereon because of the fact that the property itself was without the jurisdiction of the State at the time the power was exercised; that the situs of the property is an entirely irrelevant matter. (This decision apparently overrules Matter of Thomas, 39 Misc. Rep. 136, 78 N. Y. S. 981- see paragraph 193, ante.) 207. Power Exercised by Nonresident Decedent over Funds in This State. The decedent, Emily M. Lord, died a few days after her husband, both being residents of the State of New Jersey. Her estate consisted in part of property which passed to her as residuary legatee under her husband's will, and in part of two funds which had been held in trust during the life of her husband and which, under a power of appointment contained in the instruments creating the trusts, he appointed to his wife by his will. The trustees of the two trust funds were residents of this State and the trust property was within this State. The securities belonging to the husband's estate were in this State at the time of the death of his wife, but his will was proved in the State of his residence, and his estate was administered by his executor acting under letters issued in that State. The court held that the property held by the trustees within this State which was appointed to the testatrix by her husband When Exercised to Part of Fund Only. § 220 was property of the testatrix in this State and was taxable. Matter of Lord, 111 App. Div.; affd., 186 N. Y. 549; affd., sub nom. Beers v. Glynn, 211 U. S. Sup. Ct. 477. 208. When Power Is Exercised by Nonresident - Jurisdiction of Surrogate. Where the donee of the power, a nonresident of this State, has exercised the power in connection with real estate situated in New York county, the Surrogate's Court of that county has jurisdiction of the proceeding to assess a tax upon the transfer of the property passing by virtue of the exercise of the power of appointment. Matter of Seaver, 63 App. Div. 283; Matter of Lowndes, 60 Misc. Rep. 506. 209. When Power Is Exercised as to Part of Trust Fund Only. 1 Where a decedent's will directs that the income from certain trust property be paid to his daughters and grandson equally during their respective lives, and on the death of either, leaving lawful issue surviving, the share of the one so dying shall, unless otherwise disposed of as directed by the last will of the one so dying, be held for the use and benefit of such lawful issue equally, share and share alike," upon the death of the grandson leaving a will in which he directs. that his share of the trust fund shall be divided among his widow and his four children, share and share alike, the equal one-fifth of said trust fund so bequeathed to the widow is a valid exercise of the power of appointment over a part of said trust fund and is taxable under subdivision 6 of section 220 of the Tax Law, but the four-fifths of said fund is not otherwise disposed of § 220 Exercise of; Laws of this State Determines. by the grandson's will and his children take their fourfifths of this fund under their great-grandfather's will and are not taxable, the great-grandfather having died in 1892 and prior to the enactment of subdivision 6 of section 220 of the Tax Law aforesaid. Matter of Ripley, 122 App. Div. 419; affd., 192 N. Y. 10, mem. 210. Whether Power Is Exercised by Will of Nonresident, Is to Be Determined by the Laws of This State. The question whether the power of appointment created by the will of Silas Brown, a resident of this State, over personal property located here, was executed by the will of the nonresident decedent, Harriet E. Brown, is to be determined by the laws of this State. By 1 Rev. Stat. 727, § 126,* it is declared that lands embraced in a power to devise shall pass by a will purporting to convey all the testator's real estate" unless the intent that the will shall not operate as an execution of the power shall appear expressly or by necessary implication.” This rule has been extended to personal property (Hutton v. Benkard, 92 N. Y. 295; N. Y. Life Ins. & Trust Co. v. Livingston, 133 N. Y. 125; Thomas v. Snyder, 43 Hun, 14) and under it the power must be held to have been exercised by the will of Harriet E. Brown. Matter of Brown, N. Y. Law Journal, November 22, 1907-Surrogate Thomas. 211. When Power of Donee to Appoint Is Limited. Where the will creating the power provides that on the death of the beneficiaries leaving lawful issue surviving, the share of the one so dying shall, unless other * Now section 176 of article 5 of chapter 50 of the Consolidated Laws, being chapter 52 of the Laws of 1909. |