The opinion of the court was delivered by: Anthony A. Scarpino, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the printed Official Reports.
This is a contested proceeding by Anthony Rhodes, David Rhodes, and Robert Sylvor, Esq., as co-executors of the estate of Silas H. Rhodes ("decedent"), to apportion estate taxes against the recipients of specific devises, general bequests and gifts made within three years of decedent's lifetime. Additionally, petitioners seek authority to sell real property in order to raise funds to pay the estate taxes.
Opposition has been filed by the devisees, beneficiaries of preferred bequests, and the guardian ad litem appointed to represent infant beneficiaries and a beneficiary who is incarcerated. In addition, certain beneficiaries seek a determination that by commencing this proceeding Anthony and David triggered the in terrorem clause in decedent's will.
Decedent died testate on June 28, 2007 survived by three sons Anthony, David, and Stephen and two grandchildren, Jennifer and Benjamin Rhodes, issue of a predeceased son Andrew. His will and codicils dated April 16, 2004, November 22, 2004 and June 28, 2006 respectively were admitted to probate and letters testamentary issued to petitioners.
Under Article FIRST, decedent sets forth a statement of his testamentary intent:
"I have given much thought and deliberation to the provisions which I make for each of you . . .. While I have equal love and affection for my sons . . . I recognize that I make disproportionate provisions for my sons . . . for reasons I deem sufficient. In arriving at the specific provisions which I make . . . I have taken into account, among other factors, the provisions which I have made for each of them during my lifetime, in certain cases my son's connection with the particular assets which I bequeath to him or his issue, and in the case of the disposition of my business interests, the efforts certain sons have made in helping me run and develop the particular business."
Decedent then gave his personal property in equal shares to his issue (SECOND), specifically devised real property as follows: 411 Conklintown Road, Goshen, NY to Steven (THIRD A); 410 Conklintown Road, Goshen, NY to granddaughter Cameron (THIRD B); 65 Cherry Street, Katonah, NY to Anthony (THIRD C); 15 Reyburn Road, Katonah, NY to Benjamin (THIRD E as amended by the second codicil); and 49 Reyburn Road, Katonah, NY to Jennifer (THIRD F); gave $100,000 to each of his grandchildren Katherine and Eric (THIRD D as amended by the second codicil); gave $25,000 to a friend Eli Edwards (FIFTH A) and $200,000 to a friend Gregory Winters (FIFTH B); and gave his interest in The School of Visual Arts (SVA) and DAST Holding Corp. (DAST) to David (15 shares) and Anthony (10 shares) (FOURTH as amended by the first codicil). The residuary estate is disposed of under Article SIXTH in equal shares to decedent's three sons.
The tax clause, set forth under Article EIGHTH provides, in part, as follows:
All inheritance, succession, transfer and estate taxes . . . payable by reason of my death in respect of all items included in the computation of such taxes which shall have passed under the provisions of this Will, shall be paid by my Executors as follows:
(A) All taxes with respect to property passing under this Will shall be apportioned in accordance with the law of New York, notwithstanding the foregoing, I direct that any such taxes resulting from the bequests under Clauses SECOND, THIRD and FIFTH of this Will shall be paid by my Executor out of my residuary estate, without apportionment or reimbursement from any beneficiary.
(B) I intend that all taxes described in paragraph (A) of this Clause with respect to property passing outside of the provisions of this Will shall be apportioned in accordance with the law of New York . . ..
(D) I wish to record that I have given great consideration as to how I have directed that the taxes described in paragraph (A) of this Clause are to be paid with respect to property passing under and outside my Will and to whom I have burdened with the payment of such taxes. I believe that the provisions which I have arrived at are equitable for all of my family members.
In December, 2005, decedent transferred the property known as 411 Conklintown Road, Goshen to his son Steven and Steven's wife Karen. A contract of sale was signed under which Steven and Karen agreed to pay decedent the gift tax in the amount of $418,844 and any transfer tax associated with the same.*fn1 Decedent agreed to receive the funds, to timely pay the gift tax and to "hold-harmless the purchasers from any claim thereof." A gift tax return was filed and is the subject of an audit by the Internal Revenue Service (IRS). Steven and Karen ...