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REMMEL ESTATE (04/24/67)

decided: April 24, 1967.


Appeal from decree of Orphans' Court of Allegheny County, No. 1417 of 1963, in re estate of Althea F. Remmel, deceased.


William McC. Houston, with him Houston, Houston & Donnelly, for appellant.

Francis J. Gafford, Deputy Attorney General, with him A. Ralph Ellis and William Howard Colbert, Special Assistant Attorneys General, and Edward Friedman, Attorney General, for Commonwealth, appellee.

Joseph N. Corcoran, filed a brief for amicus curiae.

Morris R. Brooke and Cuthbert H. Latta, filed a brief for amicus curiae.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Roberts. Concurring Opinion by Mr. Justice Cohen. Dissenting Opinion by Mr. Justice Jones.

Author: Roberts

[ 425 Pa. Page 326]

Althea F. Remmel, a resident of Pittsburgh, died on March 20, 1963, leaving an estate, which consisted entirely of personalty valued at $1,684,122.35. Deductible debts and expenses amounted to $102,573.45. By her will and the codicils thereto, decedent gave specific and pecuniary legacies to certain named persons totaling $48,945 and created a trust of the residue. This trust was divided into seventeen equal parts, the income from each of which was given to an individual life beneficiary and, in certain instances, to a

[ 425 Pa. Page 327]

    successive life beneficiary. Upon the death of the beneficiary or beneficiaries entitled to receive the income from any 1/17 share of the principal of the residue that 1/17 share of principal was to be distributed to the W. H. Remmel and Althea F. Remmel Foundation, to be devoted exclusively to charitable purposes. (One of the life beneficiaries had predeceased the settlor which thereby accelerated the charitable remainder as to that 1/17 of the residue.) Mrs. Remmel expressly provided in her will that all inheritance taxes on property passing under her will be paid out of the residuary estate "or the principal of any trust succeeding thereto" and that all other legacies were given free of such taxes.

The Commonwealth assessed the combined value of the various remaining life estates to be $881,770.07 out of a total residuary estate of $1,532,603.90 or 54.34053% of that residue. Thus the combined present value of the charitable share was the reciprocal thereof, or 45.65947% of the residue. The present appeal is by the Pittsburgh National Bank, Executor under the Will of Althea F. Remmel, deceased, from the decree of the court en banc of the Orphans' Court of Allegheny County sustaining the Commonwealth's appraisement of the inheritance tax in the decedent's estate.

The dispute between the Commonwealth and the appellant concerns the method of computation utilized in arriving at the amount of tax due the Commonwealth. In particular, appellant's position is that the court below erred in permitting the Commonwealth to subtract deductions for allowable expenses and debts from a total estate valuation which included the value of charitable gifts bequeathed by the residuary clause of the decedent's will. Appellant insists that ยง 601 of the Inheritance and Estate Tax Act of 1961,*fn1 requires these

[ 425 Pa. Page 328]

    deductions to be made from an estate valuation from which the amount of the charitable gifts has first been excluded. The tax consequences of the respective computations are reflected in the following comparison:*fn2


     wealth's Appellant's

Computation Computation Difference

Total Assets $1,684,122.35 $1,684,122.35

Taxable specific bequests 48,945.00

Taxable life estates in $1,-

635,177.35 balance (54.34053%) 888,564.04

Appraisement -- Gross Estate 1,684,122.35 937,509.04

Less: allowable debts & ex-

     penses 102,573.45 102,573.45

Clear value 1,581,548.90 834,935.59

Taxable specific bequests 48,945.00

Taxable life estates in $1,-

532,603.90 balance (54.34053%) 832,825.08

Taxable 881,770.08 834,935.59 * $46,834.49

Tax at 15% $132,265.51 $125,240.34 $7,025.17

*Being the same as the residuary charitable factor of 45.65947% multiplied by

     the debts and expenses of $102,573.45.

An inheritance tax is neither a tax on the property of the decedent or on the transfer of such property but rather a tax on the right of succession in the estate of the decedent. Belefski Estate, 413 Pa. 365, 369-70, 196 A.2d 850, 852 (1964); Tack's Estate, 325 Pa. 545, 549, 191 Atl. 155, 157 (1937); Orcutt's Appeal, 97 Pa. 179, 185 (1881). The tax which is imposed "upon every transfer subject to tax under this act"*fn3 is "computed upon the value of the property, in excess of the deductions hereinafter specified."*fn4 In determining the gross value of the estate from which the deductions are taken "the appraisement to be made is not of the legacies

[ 425 Pa. Page 329]

    or devises but of the whole estate of a decedent; the debts and expenses of administration are not to be deducted from any particular gift or gifts, but from the whole estate." Frick's Estate, 277 Pa. 242, 250, 121 Atl. 35, 38 (1923), rev'd on other grounds,*fn5268 U.S. 473, 45 S. Ct. 603 (1925); accord, Tack's ...

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