Appeal by defendant from the Superior Court of Cook county;
the Hon. JOSEPH A. GRABER, Judge, presiding. Heard in the third
division of this court for the first district at the December
term, 1950. Affirmed. Opinion filed October 24, 1951. Rehearing
denied November 13, 1951. Released for publication November 21,
MR. JUSTICE FEINBERG DELIVERED THE OPINION OF THE COURT.
Rehearing denied November 13, 1951
Frank D. Wilson died on June 25, 1948, leaving him surviving his widow, Gertrude E. Wilson, and a son, Donald D. Wilson, his only heirs. His will and codicils were admitted to probate, and plaintiff, The Northern Trust Company, was appointed executor. The will made specific provisions for the widow. She determined to renounce the provisions of the will and claimed her statutory share of the estate in accordance with section 16 of the Probate Act (ch. 3, par. 168, Ill. Rev. Stat. 1949) [Jones Ill. Stats. Ann. 110.264]. The executor brought this action for construction of the will and instructions as to the distribution of the estate, occasioned by said renunciation.
Upon a hearing of the complaint and answers, a decree was entered which provided that upon the renunciation the widow took one-third of decedent's estate after deduction of the federal estate tax; and that neither the plaintiff nor the defendant Gertrude E. Wilson has any right to contribution or reimbursement on account of said federal estate taxes, except as to life insurance proceeds specifically referred to in said decree.
The widow appeals from that portion of the decree which compels her to take her share after deduction of the federal estate tax. The guardian appeals from that portion of the decree which finds the widow's share is not dependent upon the estate having real estate.
The only question arising on the appeal of the widow is whether, under the Internal Revenue Act of 1948 and under section 16 of the Probate Act, she is compelled to take her statutory share after deduction of the federal estate tax, or whether she is entitled to her statutory share before any such deduction. This precise question apparently has not been decided by the courts of this State. The able presentation of this question by both sides, in which the cases from other jurisdictions and the analogy of some of the cases in this State were discussed, has been very helpful to this court.
Except for section 16 of the Probate Act, the widow would have no right of renunciation. That section provides:
"When a will is renounced by the testator's surviving spouse in the manner provided in Section 17 hereof, whether or not the will contains any provision for the benefit of the surviving spouse, the surviving spouse is entitled to the following share of the testator's estate after payment of all just claims:
"(a) if the testator leaves a descendant, one-third of the personal estate and one-third of each parcel of real estate of which the testator died seized and in which the surviving spouse does not perfect his right to dower in the manner provided in Section 19 hereof. . . ." (Italics ours.)
By her renunciation she can take no more than the above section permits. It is there expressly provided that she is entitled to such share "after payment of all just claims." The principal contention centers around the quoted language. Does the term "just claims" include federal estate tax levied against the estate?
The federal estate tax is governed by sections 810, 811 and 812 of the Internal Revenue Code of 1948. Section 812 of the Revenue Code allows a marital deduction consisting of the interest of the surviving spouse in the estate, whether it be by will, dower, or statutory interest in lieu thereof, in the instant case it being under section 16 of the Probate Act. Such deduction from the gross value of the estate enters into the computation of the net value of the estate subject to federal estate tax.
We think there are several compelling reasons why the widow must take her statutory share after the deduction of the proper federal estate tax. Section 202, paragraph 354 [Ill. Rev. Stat. 1949, ch. 3; Jones Ill. Stats. Ann. 110.451] of the Probate Act provides for the classification of claims against the decedent's estate. The first class is funeral expenses and expenses of administration; third class, debts due the United States Government; seventh, all other debts and demands. As already noted in section 16 of the Probate Act, upon renunciation she takes after payment of all just claims. The widow contends that "just claims," referred to in section 16, necessarily means claims the decedent created before his death and not those which result from the administration of the estate. We think this is too restricted an interpretation placed upon the statute. Certainly, funeral expenses result after the death of the decedent, and do not exist at the time of death, yet the statute classifies such expenses as a claim against the estate.
In People v. Pasfield, 284 Ill. 450, the county court deducted from the gross estate, for the purpose of determining the state inheritance tax, the amount found to be due for federal estate tax. In passing upon the correctness of the ruling of the county court, the Supreme Court said (p. 453):
"If the Federal estate tax paid by the executor is to be properly considered as a debt or an expense of administration of the estate, there can be no question but that the deduction of ...