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§ 230

When Dower Not a Proper Deduction.

erty in the form it had at the death of the decedent, and no dirction in the will as to the application of the personalty for the benefit of the realty can defeat or qualify the rights of the State in the imposition and collection of the tax. Matter of Livingston, 1 App. Div. 568; Matter of Bandouine, 5 App. Div. 622; Matter of Kemp, 7 App. Div. 609; affd., 151 N. Y. 619. This principle requires that the expense of executing the trust or trust power for the sale and division of the real property, the transfers of which are exempt from taxation (decedent having died December 17, 1900) should be charged against the real estate and should not be applied in reduction of the personalty, the transfers of which are subject to a tax. Matter of Cohen, N. Y. Law Journal, April 11, 1906.

589. When Dower Is Not a Proper Deduction from Decedent's Real Estate.

The provisions made by the will of decedent in favor of his widow having been expressly stated to be in lieu of dower, and the widow having elected to accept the provisions so made for her benefit, the estate is not to be diminished for the purpose of taxation by the value of the widow's dower right. Matter of Barbey, N. Y. Law Journal, March 2, 1908, Surrogate Thomas. 590. Debt Owing to Daughter.

Where a daughter at the request of the decedent joined with the decedent in pledging a policy of insurance on his life payable to her, to secure a loan of $2,000, which sum was received by the decedent and disbursed by him, held, that it appearing that the debt had been paid by the daughter, she had a valid claim against her father's estate, and the full amount thereof was a proper deduction from the decedent's personal

Amount Paid to Compromise Debt.

§ 230

estate. Matter of Smith, N. Y. Law Journal, June 4, 1904.

591. When Amount Paid by Administrator to Compromise a Debt Should Be Deducted.

Where an action commenced in the Supreme Court by a claimant against an administrator is compromised by the administrator paying $5,500 in full settlement of such claim, and the Surrogate's Court has authorized the administrator to pay the claim as compromised, the amount so paid is a proper deduction from the decedent's gross estate and should be allowed as such by the appraiser in transfer tax proceedings upon the decedent's estate. Matter of Healy, N. Y. Law Journal, January 15, 1908, Surrogate Beckett.

592. Claims against the Decedent's Estate.

In order to be allowed as a deduction, all claims must be shown to be valid, and if the question of their validity has not been passed upon at the time of the tax proceedings their allowance by the appraiser as a deduction should be reserved for a future proceeding. Matter of Wormser, 51 App. Div. 441, 64 N. Y. S. 897.

593. Doubtful and Uncertain Claims.

In the Matter of Rice, 56 App. Div. 253, 61 N. Y. S. 911, 68 N. Y. S. 1147, it was held that where, on an original appraisal, deductions for doubtful or uncertain debts or claims are allowed, the appraiser's report and the order of taxation should contain a recital to the effect that the deduction is made without prejudice to the right of the State to a further appraisal and taxation of the whole or any part thereof, in the event that it shall appear that the items so deducted are not valid claims, or are of less value than the amount at

§ 230

Disbursements of Executor.

which they were allowed in reduction of the total assets of the estate.

594. Disbursements of the Executor or Administrator.

In the Matter of Dimon, 82 App. Div. 107, 81 N. Y. S. 428, the court outlined the practice where the allowance of certain disbursements of the executor were claimed as a proper deduction. In this case the estate was valued at $41,000, and the affidavit of the administrator showed that he had disbursed for funeral expenses, legal services, and disbursements in actions brought against the estate, $11,000. The appraiser refused to allow the amount of this claim for more than one-fourth of it. The Appellate Division stated that if this right of the appraiser was upheld, claims allowed by him might thereafter be disallowed by the surrogate, and claims disallowed by the appraiser might be allowed by the surrogate on the accounting, and therefore there was some danger of inconsistent decisions on the same question by the surrogate sitting first as an assessing officer and later as a judge to pass upon the accounts. The court, after referring to the provisions of section 225, says: "The disbursements having been made apparently in good faith, and being shown affirmatively to be reasonable, we think they should have been allowed by the appraiser and by the surrogate on the appeal. Then, if it should be shown on the accounting that too much was allowed, the surrogate could enter an order assessing the amount of the property thus shown to have been wrongfully or erroneously deducted The court states further that, where there is reasonable ground for doubting the validity of any debt paid, or the necessity or reasonableness of a disbursement made,

Funeral Expenses - Tombstone, etc.

§ 230

the report of the appraiser and the order of the surrogate could reserve the question as to assessing the transfer tax on the amount representing such debt or doubtful claim and presently impose the tax upon the rest, and the tax could be subsequently imposed upon the remainder of the estate to the extent that it passed to the transferee by the disallowance of the debt or claim on the final accounting. See Matter of Thomas, 39 Misc. Rep. 223, 79 N. Y. S. 571, and Matter of Marks, 40 Misc. Rep. 507, 82 N. Y. S. 803, as to the allowance of a sum paid in compromise or settlement of a claim.

595. Funeral Expenses.

Of decedent, are a proper deduction. Matter of Millward, 6 Misc. Rep. 425, 27 N. Y. S. 286; Matter of Liss, 39 Misc. Rep. 123, 78 N. Y. S. 969; Matter of Edgerton, 35 App. Div. 125–131, 54 N. Y. S. 700; affd., 158 N. Y. 671, no opinion.

596. Cost of Burial Plot, Tombstone, etc.

The reasonable cost of a burial plot and the cost of fencing and sodding it are to be deducted. Matter of Liss, 39 Misc. Rep. 123, 78 N. Y. S. 969. Also a reasonable sum directed to be expended for a tombstone. Matter of Black, 5 N. Y. S. 452; Matter of Edgerton, 35 App. Div. 125-131, 54 N. Y. S. 700; affd., 158 N. Y. 671.

597. A Judgment, Liability to Pay Which Is Secured by an Indemnity Bond and Mortgage Is Not a Proper Deduc

tion.

Where a judgment is obtained against the administrator cum testamento annexo of an estate for upward of $15,000, and it appears that a bond and mortgage had been given to the decedent in her lifetime to

§ 230

Liability Secured by a Bond.

secure and save her harmless from any liability on account of a certain claim, or any judgment thereon which might thereafter be obtained against her, or her executors, such a judgment is not a proper deduction in transfer tax proceedings involving the appraisal of the property of said deceased mortgagee, where it appears that the bond and mortgage were appraised as of "no value " the same being in the nature of an indemnity for said judgment. Matter of Skinner, 45 Misc. Rep. 559; affd., in this respect, in 106 App. Div. 217.

The Appellate Division says that the legatee having obtained exemption from appraisal of the alleged security on the ground that it is but indemnity, he cannot in the next breath insist that the debt which he says is indemnified must be deducted, because it is absolute

"that if it should appear eventually that the judgment constituted an absolute debt, we think the appellant has a remedy." Citing Matter of Dimon, App. Div. 107, 81 N. Y. S. 428.

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598. Debts Due New York Creditors by Nonresident Decedent. Upon the appraisal of the estate of a nonresident member of a firm having a manufacturing branch in New York and a sales department in another State, debts due New York creditors are to be deducted from New York assets. Matter of King, 71 App. Div. 581, 76 N. Y. S. 220; affd., 172 N. Y. 616, no opinion.

The surrogate of New York county, in the Matter of Doane, N. Y. Law Journal of March 12, 1903, referring to the decision in the Matter of King (supra), says: "No decision of any court has yet been made which would justify the deduction from New York assets of the full amount of claims of creditors domiciled in

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