Berman v. United States, 73-1922 Summary Calendar.

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: PER CURIAM
• Citation: Berman v. United States, 487 F.2d 70 (5th Cir. 1973)
• Decision Date: 31 October 1973
• Docket Number: No. 73-1922 Summary Calendar.,73-1922 Summary Calendar.
• Parties: Fay Lewis BERMAN, Executrix of the Estate of Joseph Emile Berman, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.

487 F.2d 70 (1973)

Fay Lewis BERMAN, Executrix of the Estate of Joseph Emile Berman, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.

No. 73-1922 Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

October 9, 1973.

Rehearing Denied October 31, 1973.

COPYRIGHT MATERIAL OMITTED

Joseph E. Brown, Jr., Asst. U.S. Atty., Robert E. Hauberg, U.S. Atty., Jackson, Miss., Scott P. Crampton, Asst. Atty. Gen., Ernest J. Brown, Acting Chief, Appellate Section, Tax Div., U.S. Dept. of Justice, Washington, D.C., for defendant-appellant.

James P. Knight, Jr., Jackson, Miss., for plaintiff-appellee.

Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

RONEY, Circuit Judge:

Before boarding an airplane at the Jackson, Mississippi, airport, Joseph Emile Berman, a 67 year old food broker and lawyer, purchased a $30,000 flight insurance policy on his life for one dollar, naming his son as beneficiary. The ownership of the policy was immediately assigned to the son. The plane crashed shortly thereafter and Berman was killed.

The question is whether the proceeds of the life policy are includable in Berman's estate for tax purposes. Since the assignment to the son was made within three years of the date of death, the decision turns on whether the estate could prove that the assignment was not made in contemplation of death. Finding that the District Court erred as a matter of law in deciding that the estate carried its burden of proof in this regard, we reverse the judgment which gave the taxpaying estate a refund, and hold that the Government properly collected estate taxes on the proceeds of the policy.

The assignment of the life insurance policy by Berman to his son was a transfer of property. The value of property transferred in contemplation of death is included in a donor's gross estate for estate tax purposes. 26 U.S.C.A. § 2035. In the case of an insurance policy, the entire death benefit is the policy's fair market value to be included, not merely the amount of the premiums paid. Bel v. United States, 452 F.2d 683 (5th Cir.1971), cert. denied, 406 U.S. 919, 92 S.Ct. 1770, 32 L.Ed.2d 118 (1972); Rev.Rul. 71-497, 1971-2 Cum.Bull. 329. Transfers made within three years of the donor's death are deemed to have been made in contemplation of death "unless shown to the contrary." 26 U.S.C.A. § 2035(b). The statute creates a rebuttable presumption. The essence of a threeyear contemplation of death case lies in the estate's ability to prove a negative, i. e., that the subject transfer was not in contemplation of death. This is seldom a light burden, and where the property transferred is so inherently deathoriented as life insurance, it is even heavier. The burden is generally carried by producing substantial evidence that the decedent's dominant motive for making the transfer was to accomplish some specific lifetime purpose.

It appears to us that the District Court confused expectation of death with contemplation of death. There is little doubt that Berman expected to live. He was a vigorous man leading an interesting and useful life with great plans for the future. His death was a tragic event. The finding that he did not expect to die on the plane flight is almost compelled by the record, let alone immune under the clearly erroneous standard of review. But the question is not whether he expected to die, but whether the assignment of the policy was motivated by the thought that he might die. To be precise, the estate's burden was not to prove that Berman expected to live or intended to live, as the estate argues, but that the assignment was dominantly motivated by that expectation of continued life.

Recognizing the function Congress intended to be served by the statutory burden imposed by Section 2035, this Court in Bel v. United States, supra, affirming a finding that a life insurance policy was transferred in contemplation of death, stated:

The statutory presumption casts upon the taxpayer the burden of proof as to the dominant, controlling, and impelling motive of the decedent in making a transfer. This means that the taxpayer has the task of persuading a court that in transferring property the decedent was not motivated by purposes associated with the distribution of property in anticipation of death.

452 F.2d at 687. See also Bintliff v. United States, 462 F.2d 403, 406 (5th Cir.1972). Shortly thereafter, this Court again explicitly pointed out the estate's burden in a Section 2035 case in First National Bank at Lubbock v. United States, 463 F.2d 716 (5th Cir.1972), cert. denied, 409 U.S. 1125, 93 S.Ct. 939, 35 L.Ed.2d 257 (1973). We there reversed the District Court's refusal to take the contemplation of death issue from the jury where there was no...