CHAPTER XIV.

PROCEEDINGS BY APPRAISERS VALUE OF FUTURE AND LIMITED ESTATES - HOW DETERMINED.

(§ 230, Tax Law.)

Section 13 of the Act of 1885 provided that from the report of the appraiser the surrogate shall forthwith assess and fix the then cash value of all estates, annuities, and life estates, or term of years growing out of said estate and the tax to which the same is liable.

By this provision the surrogate of each county in the State was authorized to compute the value of the estates or interests mentioned, and to expedite matters it is doubtless true that this authority was assumed in many instances by the appraiser or the attorneys conducting the proceedings, and therefore the number who actually participated in fixing the value of such estates was increased ad infinitum. The act did not state by what method the computation should be made, but they were generally made by the Northampton table. Matter of Robertson, 5 Dem. 92.

By chapter 713, Laws 1887, in effect June 25th of that year, section 13 was amended so that the value of every future contingent or limited estate should be determined by the rule, method, and standard of mortality and of value employed by the Superintendent of Insurance Department in ascertaining the value of policies of life insurance, save that the rate of interest to be assessed in such computations shall be 5 per cent.

per annum, and providing further that the Superintendent of the Insurance Department shall, on the application of any surrogate, determine such values, and his certificate shall be conclusive evidence that the method of computation adopted therein is correct.

This provision has been retained in the amendments since 1887, and was re-enacted by chapter 368, Laws 1905 (§§ 230, 231). (See tables at page 448.)

The courts have recognized this provision of the statute in several instances. Matter of Maresi, 74 App. Div. 76, 77 N. Y. S. 76; Matter of Tracy, 179 N. Y. 501-510. And the right to have these computations made in this way has not been questioned in our courts, which is, at least, some evidence that the provision has proven a satisfactory one. In the Matter of Robertson, 5 Dem. 92, the court held that the fact that the life tenant was in poor health and not likely to live as long as the annuity tables indicated cannot be considered in appraising the value of the life estate, as the law fixes absolutely the method to be pursued.

Recently the surrogate of Warren county held that where a widow was given an annuity of $25,000 for life, or until she remarried, and it appeared at the time transfer tax proceedings were had that the widow had remarried and thus terminated her annuity, that the value of the annuity must be ascertained by the Superintendent of Insurance, and that the value thereof, amounting to upwards of $300,000, was taxable against her, although she had only received $37,500 at the time of her remarriage. Matter of Finch (not yet reported).

§ 230

American Experience Tables of Mortality.

TERMINAL ANNUITIES AND SINGLE PREMIUMS, WHOLE

The columns headed ax are the ones used in calculating the value of life estates and annuities and show the value of an annuity of $1 at various ages.

Life Estates and Remainders - How Determined.

§ 230

For example.-To find the value of a life estate in $1,000, given a person aged 40 years, you would multiply the value of an annuity of $1 to a person aged 40 as shown in the column ax (13.71604), by $50, the annual interest on the sum of $1,000 at 5 per cent. (13.71604X$50) = $685.80.

The columns headed IIx show the value of the remainder in $1,000 at various ages after deducting the life estate at the corresponding age, and where the life tenant was 40 years old it would be $299.23.

The columns IIx would show the value of the remainder in $1 at various ages after deducting the corresponding life estate by placing the decimal point directly in front of the figures, instead of three places to the right. It will be noticed that the value of the life estate plus the remainder does not equal $1,000. Section 230 provides that such values shall be determined by the rule, method, and standard of mortality and value employed by the Superintendent of Insurance, in ascertaining the value of policies of life insurance and annuities, and the basis upon which life insurance premiums are calculated contemplates the payment of the annual premiums in advance, and the payment of the death loss at the end of the policy year in which the death of the assured occurs. Therefore, if the difference between the $1,000 and the life estate ($685.80), namely, $314.20, is divided by $1 plus 5 per cent., it will be found to equal $299.23.

While it is true that the average death claim is paid within from thirty to sixty days, and that the remainderman receives his estate immediately upon the death of the life tenant or annuitant, yet the method of calculation is prescribed by statute, and therefore there will always be a slight difference between the value of the life estate plus the value of the remainder, and the actual value of the decedent's estate.

537. The American Experience Tables of Mortality.

5

The American Experience Tables of Mortality with per cent. interest are used in the transfer tax bureau of the State Comptroller's office in checking computations of life estates and remainders. This work, however, does not contemplate even a passing reference to the method of computing the value of the many, and in some instances intricate, problems to determine the value of life estates, interests, annuities, and remainders created by will, because the act requires all such computations to be made by the Superintendent of Insurance, but the foregoing tables are given at the request of the publishers.