In re the Estate of Henseling

Petitioners, both residents of the •German Democratic Republic, commonly referred to in the United States as East Germany or the D.D.R., have moved this court for an order directing the Comptroller of the State of New York to release to them moneys on deposit to their *611credit. Application is made pursuant to SOPA 2218. The standard to be applied by the Surrogate in making his determination hereunder is whether the beneficiaries will have the benefit or use or control of the money. The burden of proof in this regard is upon the petitioners. The constitutionality of SOPA 2218 is not in issue. (Matter of Leikind, 22 N Y 2d 346.)

Expert testimony was received by this court on May 8, 9 and 10, 1972 from G. Vernon Leopold, Dr. Manfred Hofmann and Herbert Neubecker. Dr. Hofmann is án international lawyer and former Judge residing in East Berlin. Herbert Neubecker is a member of the City Council of Dresden, Germany and Chairman of the Department of Finances of the City of Dresden. All parties testified at length and were subjected to extensive cross-examination.

Upon the testimony herein and after hearing proof of the applicable statutes this court is satisfied that the citizens of the German Democratic Republic may inherit property, both real and personal, by will or intestacy and may obtain the use of this property without payment of any inheritance tax whatsoever. Dr. Hofmann established by his testimony that there is no reasonable possibility that the estate will be confiscated by the D.D.R. on any of a number of theoretical legal grounds. To his knowledge there has not been one single record -of confiscation of property coming from a country outside the D.D.R. In order to obtain a clearance from inheritance tax it is necessary to obtain a certification from the Minister of Finance. This court is assured that such certificates will be obtained and furnished in the event the applications herein are granted. It also appears necessary that a citizen of the D.D.R. must register with the Industry and Trade Bank to indicate the likelihood of inheritance from a foreign country. If they do register, they can almost routinely obtain permission to receive all of the estate proceeds or a portion of it in genx which is in effect a State store where purchases are made on a mail order basis, something similar to mail order stores in the United States. If money is taken in genx the citizen will have about twice the purchasing power he would have if the money were converted into marks. A second alternative is to obtain the money in Inter-Shop check where purchases are made in stores located in many portions of the D.D.R. Articles may be obtained such as clothing and food without having to order it on a mail order basis, again at a sharp financial advantage as against purchases on the open market.

*612A third possibility is to have the dollars converted to marks. The. present rate of exchange is 3.20 marks per dollar, and it apparently can be .spent without any danger of taxation or confiscation. Permission to use genx or Inter-Shop must be obtained from the Industry and Trade Bank but, according to the witness, this permission has never been denied and is in effect routinely given*

This court is .satisfied, therefore, that citizens residing in the German Democratic Republic, frequently described in the United States as East Germany, will have the use, benefit and control of their inheritance. An order permitting the transfer of these funds to the respective petitioners will accordingly be granted upon proof in each case that the Finance Commissioner has certified that there will be no estate tax and, that the petitioners have, in fact, registered so that there can be no danger of confiscation.