Coffin v. Kelly
| Decision Date | 06 April 1943 |
| Docket Number | No. 6745.,6745. |
| Citation | 31 A.2d 186 |
| Parties | COFFIN v. KELLY, State Tax Commissioner. In re COFFIN'S ESTATE. |
| Court | New Jersey Prerogative Court |
Proceeding in the matter of the transfer inheritance tax in the estate of Harriet D. Coffin, deceased. From an assessment by William D. Kelly, State Tax Commissioner, C. W. Floyd Coffin, sole surviving executor of the last will and testament of Harriet D. Coffin, deceased, appeals.
Decree advised in accordance with opinion.
1. In general, a motive is a consideration which determines choice and becomes an incentive to undertake the accomplishment of some act. There are usually existing facts preceding, accompanying, surrounding and following the particular course of action from which the probable motive of the person can be logically and reasonably inferred.
2. The justification for the assessment of a transfer inheritance tax on inter vivos transfers depends upon the relevant and credible facts of the individual case.
3. It has been repeatedly stated that the statute (R.S. 54:34-1, c, N.J.S.A. 54:34-1, subd. c), envelops every gift made when, while and because the donor contemplates his or her death as an event certain to occur eventually (although not apprehended to be imminent) and therefore makes a gift in substitution for an eventual testamentary disposition.
4. If otherwise taxable, transfers do not escape taxation merely because they are made through the medium of trustees.
5. Held: that this decedent intended to accomplish by means of the donations and trust agreements the transfer of substantially her entire estate for the benefit of her sons and grandchildren who should have the maximum enjoyment of it after her death.
Morrison Lloyd & Morrison of Hackensack, and Jacob Mertens, Jr., of New York City, for appellant.
David T. Wilentz, Atty. Gen., and William A. Moore, Asst. Atty. Gen., for respondent.
JAYNE, Vice Ordinary.
Were the inter vivos transfers accomplished by this decedent made by her in contemplation of death, i.e. as mere substitutes for testamentary dispositions, within the import and intendment of our statute? R.S. 54:34-1, c, N.J.S.A. 54:34-1, subd. c. In the present appeal, this is a factual question that involves the motive, intent and purpose of the transferor. Schweinler v. Martin, 117 N.J.Eq. 67, 175 A. 71, affirmed 180 A. 774, 13 N.J.Misc. 722.
In general, a motive is a consideration which determines choice and becomes an incentive to undertake the accomplishment of some act. The inducement normally arises from the attractive and gratifying character of the consideration. Motives are frequently concealed or disguised. Often their detection is a perplexing task. The operation of human emotions cannot be reduced to definite and precise rules, but usually, there are existing facts preceding, accompanying, surrounding and following the particular course of action from which the probable motive of the person can be logically and reasonably inferred.
Therefore, this appeal contemplates an investigation of the basic factual propriety of the assessment of a transfer inheritance tax by the Tax Commissioner on the inter vivos transfers. Kellogg v. Martin, 130 N.J.Eq. 338, 22 A.2d 430. The inquiry must be pursued with a consciousness that the object of the statute is to tax not only testamentary and intestate transfers but also inter vivos transfers which are in fact makeshifts employed to effectuate a purpose normally accomplished by will. Squier v. Martin, 131 N.J.Eq. 263, 24 A.2d 865; Kavanagh v. Kelly, 131 N.J.Eq. 398, 25 A.2d 547; Plum v. Martin, 132 N.J.Eq. 1, 26 A.2d 529; Dommerich v. Kelly, 132 N.J.Eq. 220, 27 A.2d 871; Voorhees v. Kelly, 132 N.J.Eq. 230, 28 A.2d 61.
The justification for the assessment depends upon the relevant and credible facts of the individual case. MacGregor v. Martin, 126 N.J.L. 492, 20 A.2d 427. The transfers having been made more than two years before the transferor's death, there is no artificially created presumption that they were or were not made in contemplation of death. Voorhees v. Kelly, supra. And so, the facts disclosed by the exhibits and proofs must be accumulated and assembled in quest of some evidential manifestation of the persuasive and indispensable motive which impelled the decedent to initiate the transfers at the chosen time.
An inceptive observation of the proofs is promptly monopolized by the conspicuous revelation that the decedent in December, 1935, at the age of seventy-one years, transferred cash and securities valued then at $734,488.02, and died in November, 1939, leaving a relatively scanty estate of approximately $14,500. In Squier v. Martin, supra, I professed the belief that it is injudicious to assume initially that every relatively large gift made by a donor of advanced age is made in contemplation of death and to survey the evidence solely from that point of view. There is no cogent reason to relinquish that conviction. Assuredly, the age of the donor and the proportional segment of his or her estate so donated are factors to be associated with all other relevant circumstances. In re Sacks' Estate, 101 N.J.Eq. 709, 139 A. 53. All must be explored because all the pertinent factors, events and circumstances will the better clarify and embellish an exposure of the truth.
Joel S. Coffin evidently was an enterprising and prosperous business man. He died testate on March 11, 1935, possessed of an estate in excess of three millions of dollars. During his life, he aided his wife, Harriet D. Coffin, in the acquisition of a financial competence of approximately $700,000. Mr. Coffin bequeathed to his widow, for and during her life, such portions of the net income of his estate ‘as she may require for her maintenance, health and personal comfort and pleasure, after she will have used for the same purposes all of the income received by her from her own property and investments after my decease.’ The corpus of his estate was devised and bequeathed, subject to a small annuity to his sister, to the testator's two sons, C. W. Floyd Coffin and Joel S. Coffin, Jr.
In December, 1935, Harriet D. Coffin made the following voluntary transfers of the contemporaneous values here stated:
+------------------------------------------------------------------+
¦C. W. Floyd Coffin ¦son ¦cash ¦$ 25,000.00¦
+-----------------------------+-------------+----------+-----------¦
¦Joel S. Coffin, Jr. ¦son ¦“ ¦25,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦Chas. H. Whittington ¦brother ¦“ ¦5,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦Ida M. Fincher ¦sister ¦“ ¦5,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦E. Frank Whittington ¦nephew ¦“ ¦5,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦Fredrick Whittington ¦nephew ¦“ ¦5,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦Francis W. Fincher ¦nephew ¦“ ¦5,000.00 ¦
+-----------------------------+-------------+----------+-----------¦
¦Issue of son, C. W. F. Coffin¦grandchildren¦securities¦329,744.01 ¦
+-----------------------------+-------------+----------+-----------¦
¦Issue of son, Joel S. Coffin ¦grandchildren¦“ ¦329,744.01 ¦
+-----------------------------+-------------+----------+-----------¦
+-----------------------------+-------------+----------+-----------¦
¦Total ¦ ¦ ¦$734,488.02¦
+------------------------------------------------------------------+
The donations in cash on December 19, 1935, were absolute and unconditional transfers. The transfers beneficial to her grandchildren are evidenced by two trust indentures executed on December 20, 1935. The obvious affiliation of all of these gifts creates the inescapable inference that all were originated by the identical incentive. Hence, an acquaintance with the distinctive features of the trust indentures is opportune.
The typical testamentary characteristics of trust indentures, however artistically contorted, do not always defy recognition. These two indentures in all aspects are twins, except that in one the trust fund is divided into three shares for the equal benefit of the three children of the decedent's son C. W. Floyd Coffin, and in the other the corpus is partitioned into five portions for the equal obtainment of the five children of her son Joel S. Coffin, Jr. It is at once observed that these transfers are not to be appropriately entitled present, absolute, unconditional and outright gifts for the immediate needs of the beneficiaries. The donor contemplated and expressly prescribed...
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