TRUSTS - APPORTIONMENT OF ANNUAL TAXES BETWEEN LIFE TENANT AND REMAINDERMAN

Annual taxes on real estate in Massachusetts were assessed on January 1 of each year, and were payable on July and October l, The will set up a trust to pay income to the tenant for life, and to pay the principal to the remainderman. The trustees sought to retain sufficient funds out of income to meet the next year's taxes, fearing that the tenant might not live long enough after January 1 to accumulate sufficient income to meet the taxes, and they brought this bill for instructions. The probate court entered a decree sustaining the trustees' contentions. On appeal, held, that although the trustees could retain the funds for a reasonable reserve, the amount of the entire year's taxes need not be retained, because upon the death of the tenant before the end of the year, there would be an apportionment of the tax burden between principal and income.

Taylor v. Bentinck-Smith, (Mass. 1939) 24 N. E. (2d) 146.