§ 2-1.8 Apportionment of federal and state estate or other death taxes;

fiduciary to collect taxes from property taxed and transferees

thereof

(a) Whenever it appears in any appropriate action or proceeding that a
fiduciary has paid or may be required to pay an estate or other death
tax, under the law of this state or of any other jurisdiction, with
respect to any property required to be included in the gross tax estate
of a decedent under the provisions of any such law (hereinafter called
"the tax"), the amount of the tax, except in a case where a testator
otherwise directs in his will, and except where by any instrument other
than a will (hereinafter called a "non-testamentary instrument")
direction is given for apportionment within the fund of taxes assessed
upon the specific fund dealt with in such non-testamentary instrument,
shall be equitably apportioned among the persons interested in the gross
tax estate, whether residents or non-residents of this state, to whom
such property is disposed of or to whom any benefit therein accrues
(hereinafter called "the persons benefited") in accordance with the
rules of apportionment herein set forth, and the persons benefited shall
contribute the amounts apportioned against them.

(b) Unless otherwise provided, when a disposition is made by which any
person is given an interest in income or an estate for years or for life
or other temporary interest in any property or fund, the tax
apportionable against such temporary interest and the remainder limited
thereon is chargeable against and payable out of the principal of such
property or fund without apportionment between such temporary interest
and remainder. The provisions of this paragraph apply although the
holder of the temporary interest has rights in the principal, but do not
apply to a common law annuity.

(c) Unless otherwise provided in the will or non-testamentary
instrument, and subject to paragraph (d-1) of this section:

(1) The tax shall be apportioned among the persons benefited in the
proportion that the value of the property or interest received by each
such person benefited bears to the total value of the property and
interest received by all persons benefited, the values as finally
determined in the respective tax proceedings being the values to be used
as the basis for apportionment of the respective taxes.

(2) Any exemption or deduction allowed under the law imposing the tax
by reason of the relationship of any person to the decedent, the fact
that the property consists of life insurance proceeds or the charitable
purposes of the gift shall inure to the benefit of the person bearing
such relationship or receiving such insurance proceeds or charitable
gift, as the case may be.

(3) Any deduction for property previously taxed and any credit for
gift taxes paid by the decedent shall inure to the benefit of all
persons benefited and the tax to be apportioned shall be the tax after
allowance of such deduction or credit.

(4) Any interest resulting from the late payment of the tax shall be
apportioned in the same manner as the tax and shall be charged wholly to
principal.

(5) Any discount allowed for prepayment of the tax shall be credited
wholly to the principal of the funds contributing the moneys used for
prepayment in proportion to the contribution made.

(d) Subject to subparagraphs (1), (2) and (3) of this paragraph, any
direction as to apportionment or non-apportionment of the tax, whether
contained in a will or a non-testamentary instrument, relates only to
the property passing thereunder, unless such will or instrument provides
otherwise.

(1) Any such direction in a will which is later in date than a prior
non-testamentary instrument and which contains a contrary direction
shall govern provided that the later will specifically refers to the
direction in such prior instrument.

(2) Any such direction in a non-testamentary instrument which is later
in date than a prior will or non-testamentary instrument and which
contains a contrary direction shall govern provided that the later
instrument specifically refers to the direction in such prior will or
instrument.

(3) Any such direction provided in a non-testamentary instrument only
relates to the payment of the tax from the property passing thereunder
and such direction shall not serve to exonerate such non-testamentary
property from the payment of its proportionate share of the tax, even if
otherwise directed in that non-testamentary instrument.

(d-1)(1)(A) If any part of the gross tax estate consists of property
the value of which is includible in the gross tax estate by reason of
§2044 of the Internal Revenue Code of 1986 as from time to time amended,
the decedent's estate shall be entitled to recover from the person
receiving the property the amount by which the total tax under article
twenty-six of the tax law which has been paid exceeds the total tax
under such article which would have been payable if the value of such
property had not been included in the gross tax estate.

(B) Clause (A) of this subparagraph shall not apply if the decedent
specifically directs otherwise by will.

(2) For the purposes of this paragraph, if there is more than one
person receiving the property, the right of recovery shall be against
each such person.

(3) In the case of penalties and interest attributable to additional
taxes described in subparagraph (1) of this paragraph, rules similar to
subparagraphs (1) and (2) of this paragraph shall apply.

(e) In all cases in which any property required to be included in the
gross tax estate does not come into the possession of the fiduciary, he
is authorized to, and shall recover from the persons benefited or from
any person in possession of such property the ratable amounts of the tax
and any interest payable by the persons benefited. The surrogate may
direct the payment thereof to the fiduciary and may charge such payments
against the interests of the persons benefited in any assets in the
possession of the fiduciary or any other person. If the fiduciary cannot
recover the amount of the tax and interest apportioned against a person
benefited, such amount may be charged in such manner as the surrogate
determines.

(f) No fiduciary is required to pay over or distribute to any person
other than the fiduciary charged with the duty to collect and pay the
tax any fund or property with respect to which the tax is or may be
imposed until the amount of the tax apportioned or which may be
apportioned against such fund or property and any interest due from the
persons entitled thereto is paid or, where the tax has not been
determined or apportionment made, unless and until adequate security for
such payment is furnished to the fiduciary making such payment or
distribution.

(g) The surrogate shall make such preliminary, intermediate or final
decrees or orders in the proceeding, as he shall deem advisable,
tentatively or finally apportioning the tax and any interest, directing
the fiduciary to collect the apportioned amounts from the property or
interests in his possession of any persons against whom such
apportionment has been made and directing all other persons against whom
the tax and any interest are apportioned or from whom any part of the
tax and any interest may be recovered to make payment of such
apportioned amounts to such fiduciary; and if it is ascertained in such
proceeding that the property in the possession of the fiduciary,
otherwise payable to a person liable for any part of the tax and
interest, is insufficient to discharge the liability of such person, the
surrogate may direct that the balance of the apportioned amount due
shall be paid to the fiduciary by such other person. If, in the course
of the proceeding, it is ascertained that more than the ratable amount
of the tax and interest due from any person has been paid by him or in
his behalf the surrogate may direct an appropriate reimbursement of the
overpayment.

(h) If the surrogate apportions any part of the tax against any person
interested in non-testamentary property or apportions the tax among the
respective interests created by any non-testamentary instrument, he may,
in his discretion, assess against such property or interests, an
equitable share of the expense in connection with the determination of
the tax and the apportionment thereof. Whenever an attorney renders
services to the estate or to its personal representative resulting in
the exclusion from the gross taxable estate of any non-testamentary
property or interests created by any non-testamentary instrument, the
surrogate may, in his discretion, assess against such property or
interests an equitable share of the compensation for such legal services
rendered to the estate or to its personal representative in proportion
to the benefit received by such property or interests from such
services, unless the decedent's will or the non-testamentary instrument
contains a direction that no portion of the tax shall be apportioned
against such non-testamentary property or against interests created by
any non-testamentary instrument. The surrogate may retain jurisdiction
of any proceeding until the purposes of this section have been
accomplished.