Becker v. St Louis Union Trust Co
| Decision Date | 11 November 1935 |
| Docket Number | No. 262,262 |
| Parties | BECKER, Collector of Internal Revenue, v. ST. LOUIS UNION TRUST CO. et al |
| Court | U.S. Supreme Court |
The Attorney General and David E. Hudson, of Washington, D.C., for petitioner.
Mr. Crawford Johnson, of St. Louis, Mo., for respondents.
The decedent in 1921 executed separate declarations of trust in favor of each of his four children, conveying to himself as trustee certain securities. He died in 1928, at which time the entire trust estate conveyed by the four trusts amounted to nearly a million dollars, which amount was included by the Commissioner of Internal Revenue as a part of the gross estate of the decedent and an additional estate tax assessed accordingly. The executors, having paid the additional tax, brought this action in a federal District Court sitting in Missouri to recover the amount. The District Court denied recovery upon the grounds that the transfer effected by each declaration of trust was made in contemplation of death, and that it was intended to take effect in possession or enjoyment at or after decedent's death.
The Court of Appeals, after a very full review of the facts and authorities, reversed the judgment. 76 F.(2d) 851. The case is here on certiorari.
The declarations of trust were in identical terms. By each the grantor declared that he held in trust for the person named certain property which was described. A copy of one of them is set forth in the opinion of the court below. The trust instrument gave the trustee usual discretionary power with respect to sale of the trust property, reinvestment of proceeds, collection of rents, income, and profits, payment of taxes and expenses incident to the care, preservation and management of the property; and provided that he should pay to the beneficiary an allowance of $300 a month, which might be increased or decreased from time to time in his discretion. Income not distributed was to be added to the principal. The final clause of the declaration provided:
The government presents for our determination two questions whether, under the provisions of section 302(c), Revenue Act of 1926 (26 USCA § 1094(c) a transfer of the property under each of the instruments here involved (1) was intended to take effect in possession or enjoyment at or after the death of the grantor; (2) was made in contemplation of death.
First. The first of these questions is settled by our decision just rendered in the case of Helvering v. St. Louis Union Trust Co., et al., 296 U.S. 39, 56 S.Ct. 74, 80 L.Ed. 29. By the declaration of trust here under review, the legal title, possession, and control of the trust estate passed irrevocably from the grantor as an individual to himself as trustee. The effect is no different than if the trustee had been another person. Cf. Reinecke v. Trust Co., 278 U.S. 339, 346, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397. By the final paragraph of the declaration, quoted above, the grantor does not retain any interest in the property, but, recognizing the completeness of the transfer, he provides that the property shall revert to him in case the beneficiary shall predecease him. The provision that the trust estate shall 'revert' in case of the predecease of the beneficiary removes any doubt as to the completeness of the transfer, if otherwise there would be any. The question, therefore, is whether the mere possibility of a reverter stamps the transfer as one intended to take effect in possession or enjoyment at or after the death of the grantor. The decision just rendered answers this question in the negative.
Second. The transfer to the trustee was complete and became effective when made, seven years before the death of the decedent. The factor which brings a gift inter vivos within the reach of section 302(c) with respect to transfers made in contemplation of death is to be 'found in the transferor's motive.' United States v....
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