This is an appeal from an order settling a first account current of the executrix of the will of Evelyne F. Cochran; fixing the source of payments of certain state inheritance and federal estate taxes, of debts of the decedent and the estate, of executrix's and attorney's fees, and of the expenses of administration; and decreeing abatement of the "legacies" of nonkindred testamentary beneficiaries in the event the "residue of the estate" is insufficient to make such payments.
Appellants are nonrelative beneficiaries under the will. Respondent, Karen Niles, referred to hereinafter as respondent, is a relative beneficiary. Thelma Wise is executrix. She makes no appearance on the appeal.
The will bequeaths specific personal property to an aunt of decedent and sums of money to three friends; bequeaths an interest in real property in trust for respondent and her issue; devises and bequeaths real and personal property to respondent directly; bequeaths real property in trust for appellant Donna Hoch, a friend; bequeaths real property in trust for appellant Gary Garibaldi, a friend; and devises and bequeaths "the rest residue and remainder" of the estate to another friend.
The court found and decreed "all legacies set forth in the will of the decedent" to appellants and respondent are "specific legacies," and further decreed, in substance, the "residue of the estate" shall be used first to pay federal estate and inheritance taxes chargeable to the beneficiaries under the
The executrix, by her account, asserts the residue of the estate on hand is not sufficient to pay the taxes, claims, debts, fees and expenses of administration remaining unpaid at the time she filed her account; further asserts an additional $235,820 cash is needed for this purpose; and sets up a schedule of abatement of "legacies" to effect payment in full of these items. It appears the total residue of the estate for which the executrix accounts is sufficient to pay all of the debts, fees and expenses of administration, but is not sufficient to pay these items and the estate and inheritance taxes payable therefrom under the terms of the will.
Concededly, the order directing the executrix first to pay the taxes from the residue, and thereafter to pay the debts, fees and expenses of administration, requires an abatement of devises and bequests under the will; the provisions of the order directing abatement first of testamentary dispositions to nonkindred, and then to kindred, results in a total abatement of "bequests" of real property to appellants; but there would be no such total abatement if the debts, fees and expenses of administration were paid first from the residue, the federal estate taxes were "prorated among the persons interested in the estate" as devisees and legatees pursuant to Probate Code sections 970, 971, 976, and appellants paid the state inheritance taxes for which they are liable under Revenue and Taxation Code sections 14101 and 14121.
We conclude the direction by the testatrix to pay the designated estate and inheritance taxes "out of the residue of my estate" is a direction to pay such out of that part of her estate remaining after satisfaction of the devises and bequests made in her will and payment of the debts, fees and expenses of administration of her estate.
In Paragraph I of the will the testatrix first directed her executrix to pay all her "just debts and funeral expenses," and then directed payment of the designated taxes out of the residue of her estate. The arrangement of these
Respondent's contention the taxes should be paid first, and then the debts of the estate, is premised on an interpretation of the will which would defeat the basic intent of the testatrix to devise designated property to appellants. For the apparent purpose of enabling her devisees to receive the property devised them without depletion, the testatrix directed the estate and inheritance taxes chargeable to them as devisees should be paid from the residue of her estate. Certainly, she did not intend this provision to effect an abatement of these devises.
If, as appears from the record, the residue of the estate, after payment of debts, fees and commissions, is not sufficient to pay the estate and inheritance taxes as directed by the will, the direction is ineffective to the extent the residue is not sufficient to permit compliance; the devises to appellants remain intact; but appellants are subject to the tax burdens imposed by statute as though the tax payment direction in Paragraph I never existed (Estate of Nesbitt, supra, 158 Cal.App.2d 630, 633).
In light of the foregoing conclusion we need not consider other contentions of the parties, the ambiguous nature of the order appealed from or its effect.
The order is reversed.
Whelan, Acting P.J., and Ault, J., concurred.
A petition for a rehearing was denied March 14, 1973, and the petition of claimant and respondent Miles for a hearing by the Supreme Court was denied April 25, 1973.
FootNotes
The trial court in the case at bench did not find or decree the testamentary disposition of real property in Paragraphs VI and IX of the will were "legacies"; instead, it found and decreed merely the "legacies" in these paragraphs were "specific legacies." [Italics ours.] In fact there were no "legacies" in those paragraphs.
The distinction between devises and legacies is significant in this case because Probate Code section 752 provides: "[L]egacies ... to kindred shall abate only after abatement of legacies to persons not related to the testator." [Italics ours.] However, there is an indication the Legislature intended section 752 should govern devises of real property as well as bequests of personal property, i.e., legacies, when the cause of abatement is the satisfaction of "debts or expenses or family allowance" as provided in Probate Code section 753 (Estate of Stevens, 27 Cal.2d 108, 118-121 [162 P.2d 918]).
However, as noted, the effect of the foregoing ambiguities on the merits of this case are nonexistent at this stage in light of our conclusion respecting the meaning of the phrase "residue of my estate" as used by the testatrix in Paragraph I of her will.
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