Appeals, Nos. 163, 164, 165, March T., 1957, from decree of Orphans' Court of Allegheny County, Nos. 1146, 1146A of 1942, and 5420 of 1953, in re inter vivos trust and in re estate of Fanny M. Dravo. Decree affirmed.
William J. Kenney, with him Roy Thomas Clark, Donald M. Birch, and Kenney, Stevens, Hill & Clark, for appellant.
Richard B. Tucker, Jr., for appellee.
Before Jones, C.j., Bell, Chidsey, Musmanno, Arnold, Jones and Cohen, JJ.
These appeals are from the construction by the court below of a provision relating to taxes in the will of Fanny M. Dravo, deceased. There is no dispute as to the facts or the history of the case. During her lifetime Mrs. Dravo created two inter vivos trusts under the terms of which Lehigh University was one of a number of beneficiaries who received a remainder interest. The same question as to the construction of the will having arisen following accounts filed by the trustees in each trust and an account filed by the executors of the decedent's estate, the proceedings were consolidated for the purpose of argument and adjudication of the tax question involved. The court en banc entered a final decree dismissing exceptions and affirming the ruling and decree of the auditing judge that the Pennsylvania transfer inheritance tax attributable to the trusts was payable out of the trusts and not out of the decedent's residuary estate. Thses appeals by Lehigh University followed.
The decree is affirmed on the opinion of Judge BOYLE, the auditing judge, reported at 8 D. & C.2d 88. Costs of these appeals to be paid by the trustees of the inter vivos trusts.
DISSENTING OPINION BY MR. JUSTICE BELL:
In 1931 Fanny M. Dravo, the testatrix, created two deeds of trust (A and B) under the terms of which the income was payable to Mrs. Dravo's husband for his life, and upon his death the income was payable to the settlor for her life, and upon her death (1) Trust A was to be paid and distributed among twelve individual donees, outright, or for life with vested or contingent remainders thereafter, and (2) Trust B was to be paid and distributed among four charitable institutions. Mrs. Dravo's husband died February 25, 1934; Mrs. Dravo died December 11, 1953. Mrs. Dravo in her last will dated October 24, 1953, left an estate of over a million dollars.
The Commonwealth of Pennsylvania validly assessed Pennsylvania transfer inheritance taxes on the transfer of the trust assets at Mrs. Dravo's death, because these transfers were intended to take effect at her death: Todd Trust, 358 Pa. 530, 58 A.2d 135. The property which was included in the inter vivos deeds of trust (A and B) were (six months after Mrs. Dravo's death) excluded from her federal gross estate by the Director of Internal Revenue. The Orphans' Court considered the account of the executors and the account of the respective inter vivos trustees together, and ruled that the Commonwealth was entitled to approximately $21,000. inheritance tax from the remaindermen of Trust A and of Trust B, and that the executors of the Dravo Estate were not liable for the inheritance tax on the inter vivos trust property. A remainderman under Trust A and Trust B has appealed.
The Pennsylvania Transfer Inheritance Tax Act of June 20, 1919, P.L. 521, Article I, § 1, 72 PS 2301, as amended, provides: "A tax ... is hereby imposed upon the ...