APPEAL from the Circuit Court of Lake County; the Hon. ALVIN
I. SINGER, Judge, presiding.
MR. JUSTICE NASH DELIVERED THE OPINION OF THE COURT:
The First National Bank of Lake Forest, as executor of the estate of Nancy Grant, brings this appeal under Supreme Court Rule 304(b)(1) (Ill. Rev. Stat. 1975, ch. 110A, par. 304(b)(1)) from an order directing it to compute the elective share of the surviving spouse prior to the deduction of Federal estate taxes. The central issue is whether the rule of equitable apportionment announced in Roe v. Estate of Farrell (1978), 69 Ill.2d 525, 372 N.E.2d 662, applies to exempt from Federal estate taxation the statutory share taken by a surviving spouse under section 2-8 of the Probate Act of 1975 (Ill. Rev. Stat. 1977, ch. 110 1/2, par. 2-8). We hold it does not and therefore reverse the order of the circuit court of Lake County.
Nancy McPherson Grant died on December 24, 1976. She was survived by her husband of 38 years, W. Raymond Grant, her son, Arthur Grant, and three grandchildren. The decedent's will was admitted to probate on March 1, 1977, and on that same date a petition was filed by the husband renouncing the will pursuant to section 2-8. Under the provisions of subsection 2-8(a) the husband is entitled to a one-third share of the entire estate "after payment of all just claims" and both parties agree this share fully qualifies for the marital deduction under Federal tax law. 26 U.S.C. § 2056(d)(3) (1976).
On June 8, 1978, the husband filed a petition to recover his statutory share without any deduction for Federal estate taxes. He argued that under the rule of equitable apportionment announced in Roe v. Estate of Farrell (1978), 69 Ill.2d 525, 372 N.E.2d 662, the burden of the estate tax must be apportioned among those assets which generate the tax. He concluded that the one-third share he is entitled to receive under Illinois law generates no tax since it qualifies for the marital deduction and is not includible in decedent's taxable estate. (26 U.S.C. §§ 2001, 2051, 2056 (1976).) The trial judge apparently agreed and ordered the one-third share to be computed before deduction of Federal estate taxes. This appeal followed.
1 The marital deduction was made a part of the Internal Revenue Code in 1948 in order to allow common-law jurisdictions to confer upon their citizens the same tax saving advantages available to residents of community property States. (In re Estate of Mosby (1976), 170 Mont. 463, 554 P.2d 1341.) This equality was to be achieved by permitting a surviving spouse to take up to 50 percent of the decedent's estate free of Federal estate taxes. (26 U.S.C. § 2056(c)(1) (1976).) Petitioner concedes, however, that congress left it to the States to determine how the estate tax burden should be distributed (Riggs v. Del Drago (1942), 317 U.S. 95, 87 L.Ed. 106, 63 S.Ct. 109; Roe v. Estate of Farrell) and whether or not the marital deduction should be assessed with a proportionate share. (In re Estate of Mosby; In re Estate of Glover (1962), 45 Haw. 569, 371 P.2d 361, 366.) Resolution of the question before us, therefore, depends upon the interpretation of State rather than Federal law.
The controlling statute in this case is section 2-8 of the Probate Act of 1975 (Ill. Rev. Stat. 1977, ch. 110 1/2, par. 2-8) which provides in part as follows:
"(a) If a will is renounced by the testator's surviving spouse, 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: 1/3 of the entire estate if the testator leaves a descendant or 1/2 of the entire estate if the testator leaves no descendant." (Emphasis added.)
Section 18-10 defines claims which may be presented against an estate to include "debts due the United States":
"All claims against the estate of a decedent are divided into classes in the manner following:
1st: Funeral expenses and expenses of administration. For the purposes of this paragraph funeral expenses paid by any person, including a surviving spouse, are funeral expenses and funeral expenses include reasonable amounts paid for a burial place, marker thereon and care thereof.
2nd: The surviving spouse's or child's award.
3rd: Debts due the United States.
4th: Money due employees of the decedent of not more than $800 for each claimant for services rendered within 4 months prior to the decedent's death ...