ards of mortality and value employed by the superintendent of insurance. In one case this theory of computation was applied, even though the life tenant. had died before the making of the appraisement." But in a subsequent case this theory was departed act or omission of the legatee or devisee, it shall be taxed as if there were no possibility of such devesting": Laws 1911, p. 2116.

When a testator, by his will, passes his residuary estate to his brother, and by a codicil directs him to pay C. one thousand dollars a year for life, and to execute to her an obligation to that effect, the annuity to C. is a charge on the residue, and property therein passes which may be taxed at its present worth: Estate of Rothschild, 71 N. J. Eq. 210, 63 Atl. 615, 72 N. J. Eq. 425, 65 Atl. 1118.

A gift in lieu of dower, of eight thousand dollars payable annually in equal installments, is held not an annuity in Chisholm v. Shields, 67 Ohio St. 374, 66 N. E. 93.

There is a distinction between income and an annuity. The former embraces only the net profits after deducting all necessary expenses and charges; the latter is a fixed amount payable absolutely and at stated intervals: Peck v. Kinney, 143 Fed. 76, 74 C. C. A. 270, holding that a bequest was taxable as an annuity, not as a gift of income, as provided by the war revenue act of 1898.

Where a will, after giving annuities to the sisters of the testator, bequeathed the residue of the estate to a university, and the executor, pursuant to recommendations in the will, purchased the annuities from an insurance company, in fixing the amount of the transfer tax to be paid by the residuary legatee, the court will deduct the amount so paid for the annuities, notwithstanding such amount exceeds the sum which the state superintendent of insurance determines the annuities to be worth: Matter of Hutchinson, 105 App. Div. 487, 94 N. Y. Supp. 354.

Where a man devises land to his son's wife and directs the devisee to pay out of the rents and profits of the land the sum of two thousand dollars a year to his stepdaughter in equal quarterly payments, and further directs that "all the bequests of money in this will made are to be paid without deductions for state tax," it has been held that the annuity is chargeable with the collateral inheritance tax, and there appearing no intention in the will to distinguish the bequest in money payable at stated periods out of the rents and profits of the land from bequests of round sums of money, the tax on the annuity must be paid out of the residuary estate: Estate of Lea, 194 Pa. 524, 45 Atl. 337.

2 In re Jones, 28 Misc. Rep. 356, 59 N. Y. Supp. 983. In appraisals under the statute of 1885, the value of a life estate was estimated by reference to the tables of mortality adopted by the general rules of practice: In re Robertson, 5 Dem. Sur. (N. Y.) 92. See Union Trust Co. v. Durfee, 125 Mich. 487, 84 N. W. 1101.

from in ascertaining the value of a remainder, where the life tenant had greatly exceeded the expectancy of life and encroached on the principal before his death." And the federal courts, in applying the war revenue act of 1898, have declined to resort to mortality tables for the purpose of ascertaining a life expectancy when the period of that life had already been determined.* They have also declined to use mortality tables to ascertain the value of the remainderman's interest where the division of the residue of the testator's estate was postponed until the death or remarriage of his widow, for, observed the court, if the use of mortuary tables are permissible in a proper case, they should not be used here, since one of the contingencies contemplated by the will is the remarriage of the widow, and, while the probability of death may perhaps be approximately estimated from the recorded. experience of insurance companies, there are as yet no statistics available from which the probability of remarriage may even be conjectured." In Massachusetts, however, the valuation of the contingent remainder of property devised to an exempt person for life is to be made as of the date of the testator's death, according to the rule laid down in the statute, by actuaries' combined experience tables, and not according to the time of the actual termination of the life estate, although such termination occurs before the valuation is made."

In fixing the tax upon annuities created by will, the probable duration of the life of the annuitant is ascertained by the rule and standard of mortality employed in ascertaining the value of policies of life insurance. and annuities. Upon the value of the annuity thus

8 Estate of Hall, 36 Misc. Rep. 618, 73 N. Y. Supp. 1124.

• Herold v. Kahn, 159 Fed. 608, 86 C. C. A. 598.

5 Herold v. Shanley, 146 Fed. 20, 76 C. C. A. 478.

5a Howe v. Howe, 179 Mass. 546, 55 L. R. A. 626, 61 N. E. 225.

determined the amount of the transfer tax is computed and becomes payable forthwith out of the principal fund set aside for creating the annuity. Should this fund happen to be the residuary estate of the testator, the tax paid upon the annuity is returned to such estate by deducting from each annual payment of the annuity the proportionate part of the tax, to be ascertained by dividing the amount of the tax paid by the number of years the annuity will probably continue."

The Massachusetts statute contemplates that the tax is to be paid out of the annuity as soon as the annuity becomes payable, and at the time when payments on account of it are made. "The effect of this construction," to use the language of Justice Field, "may be that the first payment or payments on account of the annuity will be exhausted by the tax. Other methods of collecting the tax might have been adopted, such as collecting the tax on each payment and deducting it from such payment, and then the tax would be collected proportionately to the amounts paid so long as the annuity was payable, but the method found in the statute is one, we think, which the legislature could adopt."

Under the Illinois statute a present inheritance tax cannot be imposed upon each annuitant to the full extent of his proportionate share of the entire fund from which the annuity is to be paid, although by joint action of all annuitants the entire income may be divided between them, where the will limits the amount to be paid to each in the absence of such joint action, and no increase can be made without the consent of all.

In re Tracy, 179 N. Y. 501, 72 N. E. 519.

Minot v. Winthrop, 162 Mass. 113, 26 L. R. A. 259, 38 N. E. 512. • People v. McCormick, 208 Ill. 437, 64 L. R. A. 775, 70 N. E. 350.

§ 91. Vested Remainders.-Whatever uncertainty there may be as to the application of inheritance tax statutes to contingent remainders, and there is no little of it, as will presently appear, there seems to be no doubt that ordinary vested remainders, not subject to any condition or contingency, are presently taxable under the general system of inheritance taxation now in vogue. And the fact that the owner of

Ayers v. Chicago Title etc. Co., 187 Ill. 42, 58 N. E. 318; People v. McCormick, 208 Ill. 437, 64 L. R. A. 775, 70 N. E. 350; Matter of Dows, 167 N. Y. 227, 88 Am. St. Rep. 509, 52 L. R. A. 433, 60 N. E. 439; Estate of Vinot, 7 N. Y. Supp. 517; Estate of Bogert, 25 Misc. Rep. 466, 55 N. Y. Supp. 751; Estate of Sherman, 30 Misc. Rep. 547, 63 N. Y. Supp. 957; Estate of Runcie, 36 Misc. Rep. 607, 73 N. Y. Supp. 1120; Estate of Clarke, 39 Misc. Rep. 73, 78 N. Y. Supp. 869; Commonwealth's Appeal, 127 Pa. 438, 17 Atl. 1094; Brown v. Kinney, 128 Fed. 310.

Vested remainders for life and contingent remainders absolute are undoubtedly embraced in the words "all property in possession or expectancy" and "all estates, real, personal and mixed, of every kind whatsoever": Bailey v. Drane, 96 Tenn. 16, 33 S. W. 573.

The value of a vested remainder, for purposes of the inheritance tax under the New York statute of 1892, is the value of the whole estate less the value of the life estate: Estate of Lange, 55 N. Y. Supp. 750; Estate of Bogert, 25 Misc. Rep. 466, 55 N. Y. Supp. 751.

Where corporate stock is bequeathed to one for life, with power to invest and reinvest it, with remainder to another, the vested interest of the remainderman is subject to the inheritance tax, regardless of whether the life tenant is entitled to the possession of the corpus: Estate of Bushnell, 73 App. Div. 325, 77 N. Y. Supp. 4, affirmed, 172 N. Y. 649, 65 N. E. 1115.

A bequest for life to the testator's mother, with remainder to his sister, upon the death of the mother, vests the entire estate, legal and equitable, in the remainderman, and a residuary legatee of the sister takes the remainder subject to the inheritance tax. And a bequest to the testator's widow for life, with remainder to his son and daughter subject to a power of appointment by the widow, who exercises the power in favor of the daughter by will admitted to probate on the day of the death of the daughter, vests in the daughter upon the death of the father, passes under the will of the former to her residuary legatee, and is subject to the tax. Where there has been no settlement of the executor's accounts under the will of the mother, and hence the amount of the residuary estate, if any, is unascertainable, the amount to which the daughter was entitled as residuary legatee is not subject to the tax: Estate of Zefita, 167 N. Y. 280, 60 N. E. 598, affirming 44 App. Div. 340, 60 N. Y. Supp. 927.

the prior life estate is exempt does not relieve the owner of the remainder from the tax.10 The present value of the remainder, for purposes of the inheritance tax, is susceptible of ready computation by aid of mortality tables," and the New York statute contemplates that, the respective values of the life estate and remainder having been ascertained, the tax shall be computed and paid forthwith out of the property transferred. "The result is that the life tenant loses, during the continuance of his estate, the interest upon the corpus of the trust so paid out, and eventually the remainderman receives his estate diminished by the amount of such payment." 13

§ 92. Future and Contingent Estates-Earlier New York Rule.-Until quite recently the taxation of future contingent estates or remainders in New York was governed by the following statute: "Estates in expectancy which are contingent or defeasible shall be appraised at their full undiminished value when the persons entitled thereto shall come into the beneficial enjoyment or possession thereof, without diminution for or on account of any valuation theretofore made of the particular estates for purposes of taxation, upon which said estates in expectancy may have been limited." Under this statute it was repeatedly held that future contingent estates therein mentioned were not taxable until they vested in possession and the beneficial owner thereby ascertained. The taxation of such interests was postponed until the contingency was settled. To the mind of the courts the law in its lan

10 Appeal of the Commonwealth, 127 Pa. 435, 17 Atl.. 1094; Bailey v. Doane, 96 Tenn. 16, 33 S. W. 573.

11 Matter of Dows, 167 N. Y. 227, 88 Am. St. Rep. 509, 52 L. R. A. 433, 60 N. E. 439; Estate of Lange, 55 N. Y. Supp. 750; Estate of Bogert, 25 Misc. Rep. 466, 55 N. Y. Supp. 751.

12 Matter of Tracy, 179 N. Y. 501, 72 N. E. 519.