Appeal from the Appellate Court for the Fourth District; heard
in that court on appeal from the Circuit Court of Jersey County,
the Hon. Howard Lee White, Judge, presiding.
MR. JUSTICE KLUCZYNSKI DELIVERED THE OPINION OF THE COURT:
This appeal presents a question of apportionment of Federal estate tax liability among recipients of the assets of the estate of testator, Lyman Gowling. The circuit court of Jersey County ruled that the taxes should be paid from probate assets, thereby excluding the remainder interests of plaintiffs Lyman Fleming and Virginia Prosser, interests acquired by deeds executed in 1963. On appeal by testator's widow, Pearl Gowling, the appellate court reversed, holding that the tax liability should be apportioned among all assets of the estate which generated that liability (77 Ill. App.3d 548). Lyman Fleming and Virginia Prosser would thereby be required to bear a proportionate share of the tax liability, since their remainder interests generated part of that liability, and Pearl Gowling would not be required to pay any part of the taxes, since her interest qualified for the marital deduction allowed by Federal law. We granted the petition for leave to appeal of Lyman Fleming and Virginia Prosser.
In April of 1963, testator and his spouse at that time, Nettie Gowling, deeded two parcels of farm property to Lyman Fleming, testator's grandson, and to Virginia Prosser, testator's daughter, reserving life estates. Nettie Gowling died in 1967, and testator thereafter married Pearl Gowling, defendant herein. On November 21, 1977, testator died, survived by Pearl. In his will, testator specified that crops growing or harvested on the land deeded to the remaindermen, Lyman Fleming and Virginia Prosser, but on which the landlord's (testator's) share had not been paid, should not be included in his estate and should belong to the remaindermen. Testator also bequeathed to Gene Prosser and Lois Call, share and share alike, his accounts in the Jersey Savings and Loan, and to his wife, Pearl, any remaining bank accounts. Testator provided that the residue should go to Virginia Prosser. Lyman Fleming was named executor. At testator's death, he held various savings accounts, checking accounts and certificates of deposit in joint tenancy with his wife, Pearl, totaling $19,000.
On June 29, 1978, Lyman Fleming, in his capacity as executor, filed a petition to establish and assess Federal estate tax and debt liability. Count I of that petition relates to Federal estate taxes and is the only count of concern to us here. The allegations contained therein are as follows:
"1. The residuary estate * * * is $1,211.04.
2. The will heretofore admitted to probate contains no provisions as to the payment of the federal estate taxes.
3. The total gross estate, as shown on the United States Estate Tax Return for LYMAN GOWLING attached hereto and made a part hereof, is $436,943.35.
4. By specific bequests in the will, joint tenancies, previous deeds to real estate wherein a life estate was reserved by decedent, and the residuary paragraph of the will, the following individuals have received or are to receive the following amounts, comprising the total gross estate for federal estate taxes.
a. Lyman Fleming $232,600.00 or 54% of Total b. Virginia Prosser 114,561.04 or 26% of Total c. Pearl Gowling 71,412.03 or 16% of Total d. Gene Prosser 9,185.14 or 2% of Total e. Lois Call 9,185.14 or 2% of Total ___________ ____ $436,943.35 100% of Total
5. The total amount of federal estate taxes that are to be paid are $72,142.62.
6. Pursuant to law residuary assets are to be used to pay estate taxes and debts.
7. After applying the residuary assets to the payment of federal estate taxes, there will be a balance of $70,931.58 to be paid.
8. The law applicable in Illinois is that when the will is silent as to payment of federal estate taxes, each beneficiary is to pay his or her proportionate share, using the amount of the total gross estate for federal estate taxes as the denominator."
Based on these allegations, the petition prayed that Federal estate tax liability be apportioned among the various recipients of the assets of the estate as follows: Lyman Fleming, $38,303.06; Virginia Prosser, $19,653.25 (representing residuary assets of $1,211.04 plus 26% of $70,931.58); ...