Appeal, No. 15, Jan. T., 1963, from order of Orphans' Court of Bucks County, No. 33032, in re estate of H. Russell Pickering, deceased. Order affirmed.
Irvin Stander, Special Assistant Attorney General, with him Robert W. Valimont, Special Assistant Attorney General, Ralph S. Snyder, Deputy Attorney General, and David Stahl, Attorney General, for Commonwealth of Pennsylvania, Department of Revenue, appellant.
Hale Pratt, with him Vanartsdalen & Pratt, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. CHIEF JUSTICE BELL
H. Russell Pickering died on December 7, 1955 leaving a Last Will dated August 7, 1953. Testator provided in ITEM 1:
"I direct that my Executor pay all my just debts and funeral expenses as soon as possible after my decease; and that the same together with all Transfer Inheritance Taxes, Federal Estate Taxes and other taxes be paid from my residuary estate,*fn1 ..."
In the eighth item of his will testator gave his residuary estate "[after] payment of my just debts, taxes and cost of the administration of my estate and the specific legacies" to his trustees:
"(a) to hold three quarters of this remainder as a Trust Fund for the benefit of my niece Anna Winifred Beatrix Lockhart" and to pay over the net income
therefrom to her for life and after her death to pay the principal "to any child or children of my said niece as each may become of legal age, share and share alike; the issue of any child to take the share its parent would have received if living. ...
"(b) to pay over and distribute the other one quarter of the aforesaid remainder of my estate as soon as it can conveniently be done, to the children of my aunts Hannah Barnsley Chambers and Elizabeth J. Comfort and to the children of my uncles William Barnsley and J. Herman Barnsley, share and share alike; and in case any of such children are not living at the time of my death then their share to go to their children."
The executor paid the Pennsylvania Transfer Inheritance tax on all bequests and on all interests except the remainder interest in three-quarters of the residuary estate which was set up as a trust fund for and bequeathed to the children and issue of Anna after her death.
After the confirmation of the executor's account, the Court filed an opinion and an order in which it held that Pickering's will required all inheritance taxes upon future as well as upon present interests to be paid by the executor, and that until such tax payments were made, a final award to the trustees could not be made.*fn2 Accordingly, the executor paid the inheritance tax "due by reason of present interests under Pickering's will" on April 25, 1958. Thereafter the executor requested the Register of Wills to assess inheritance tax upon the remainder to Anna's children and issue for the purpose of prepaying such tax.
The Commonwealth claimed a collateral inheritance tax on the remainder set apart for Anna's children and
issue based upon the value of their remainder interest at the date of testator's death.*fn3 The executor on the other hand contended that the tax should be based upon a taxable value of the gifts in remainder, computed as of February 9, 1959*fn4 instead of the date of testator's death. More specifically, the Commonwealth contends that in determining the value of the aforesaid remainder interest for inheritance tax purposes, all Federal Estate taxes theretofore paid ...