Summary
In Berger v. Burnett, 95 N.J. Eq. 643, 646 (E. A. 1923), it was held that the residue of a testator's estate is what is left after the payment of all debts, legacies, expenses of administration and other proper charges and commissions.
Summary of this case from Gesner v. RobertsOpinion
07-10-1923
BERGER et al. v. BURNETT et al.
Lum, Tamblyn & Colyer, of Newark, for complainants. Burnett, Sorg, Murray & Duncan, of Newark, for defendants.
Bill to construe will of Carl Berger, deceased, by Irmgard Berger and another, against D. Frederick Burnett, executor, and others. Will construed.
Lum, Tamblyn & Colyer, of Newark, for complainants.
Burnett, Sorg, Murray & Duncan, of Newark, for defendants.
CHURCH, V. C. Tills is a bill for the construction of the last will and testament of Carl Berger, who died June 15, 1920. He directed a payment of his debts, and after certain specific devises and bequests gave all the rest, residue, and remainer of his estate, both real and personal, to his executors and trustees in trust to divide the corpus into two equal funds to be known as the Irmgard and Isolde trust funds, respectively, and to pay the net income from the respective funds to his children with remainder over in each case to others. Both children were infants and dependents at the time of testator's death.
The first question is: What constitutes the residue of the estate? I am of the opinion that the "residue" of the estate is that which was left after the payment of the debts and legacies, specific and general, and satisfying the other specific gifts. In re Adrian, 87 N. J. Eq. 307, 101 Atl. 52.
Counsel raises in addition two other questions, as follows: How is this residue to be calculated as a matter of mathematics; and, does a different rule obtain in calculating what constitutes residue after the first year after the testator's death, and that which obtains during the first year following such death? These questions, I think, may be answered by the following illustration: Assume that the gross estate amounted to $100,000 and the debts and legacies to $50,000. Suppose that the total amount of debts and legacies paid during the first year was $30,000, that on date eighteen months after testator's death $10,000 was paid on account of debts and legacies, and on date three years after testator's death $10,000 was paid, completing payments on debts and legacies. Suppose also that income on the entire estate for the first year was $6,000, for the following six months the Income on the entire estate was $2,100, and for the eighteen months thereafter was $5,400, making a total income for the three years of $13,500.
The amount due the life tenants as income on the residue for the three years is:
$50,000+$13,500 / $100,000+$18,000 x $18.000=$9,686.44, where the $50,000 is obtained by substracting the total amount of debts and legacies from the amount of the gross estate. The sum $18,000, which occurs twice in the formula, is obtained as follows: Multiply $5,400, income for the last eighteen months, by $100,000, amount of the gross estate, and divide by $60,000 amount in the hands of the executors (exclusive of income) during the last eighteen months. Similarly, multiply $2,100, income for the six months period, by $100,000 and divide by $70,000, adding the results to $6,000 income for the first year,
$6,000+$2,100x$100,00 / $70,00+ $5,400x$100,000 / $60,000=$18,000
The amount due life tenants for any one year of the three years following the testator's death is one-third of $9,868.44, or $3,228.81.
The residue of the estate from which the trust funds are to be formed is:
$50,0000+$13,500 / $100,000+$18,000x$100,000 =$53,813,56 and this sum must be considered to have been the residue at any time during the three years following the testator's death, as well as thereafter.
The rules of calculation just illustrated may be applied, in the case at bar.
The use in the calculation, as above, of the amount in the hands of the executors exclusive of income, at a given time, rather than the total amount in the hands of the executors, implies the assumption that the former amount is the principal on which income is actually received. Although this may not be quite correct, it is as nearly so as the alternative assumption that interest received on the estate was compounded at every time that payment on account of debts and legacies was made, however frequently. The former assumption has also the advantage of greatly simplifying the calculation.
The effect of the above rules of calculation is to give life tenants a certain proportion of the income on the entire estate for the three years, or, what is the same thing, the entire income on the residue of the estate for the three years.