ESTATE OF GIERSE v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 92103.
| Decision Date | 26 May 1939 |
| Docket Number | Docket No. 92103. |
| Citation | 39 BTA 1134 |
| Parties | ESTATE OF CECILE LE GIERSE, DECEASED, BY EDYTH LE GIERSE AND BANKERS TRUST COMPANY, EXECUTORS, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Frederick O. McKenzie, Esq., for the petitioners.
Harold F. Noneman, Esq., and E. C. Hanson, Esq., for the respondent.
The respondent determined a Federal estate tax deficiency in the amount of $3,875.29. The sole question is whether a certain amount of $25,000 hereinafter more fully described is includable in the decedent's gross estate under either subdivision (a), (c), or (d) of section 302 of the Revenue Act of 1926, as amended, or whether the amount is excludable under subdivision (g) thereof as representing "insurance" not in excess of $40,000 receivable by other beneficiaries.
FINDINGS OF FACT.
Cecile Le Gierse, a resident of New York City, hereinafter sometimes referred to as the decedent, died aged eighty years, seven months, and fifteen days, January 1, 1936, of paralysis or cerebral apoplexy, with which she had been stricken on December 24, 1935. Though she had had chronic arthritis for eight or ten years and had been taking treatment for the latter since March 1934, she had never had a paralytic stroke before, and during the last few years of her life she had suffered no other illness or disease. The disease never reached the "acute" stage as distinguished from the "chronic" stage. Her physician had not attended her from March 1935 to December 24, 1935. In March 1935 her physical condition was reasonably good, her blood pressure normal for her age, and she was very cheerful. There was no connection between the arthritis and her death. Though she was very alert, she was not able to get out of her home much, was practically confined to it, for the last several years of her life by the arthritis, and she participated in no outside activity. She got about in the house with a cane. She never discussed with her physician fear of death. She had a musicale at her home on the 10th of December 1935 and a dinner on the 16th of December. She was herself in attendance at both affairs and appeared to be in excellent health and in good spirits. Another musicale was planned for the 28th of December, but the invitations thereto were recalled on the 26th of December because of her illness. During the summer of 1935 the decedent had a conversation with a friend as to the necessity of moving her residence. It had been unofficially announced that her home, the Rockingham, would be condemned and the building torn down and she was wondering and talking about where she was going and was looking for an apartment. The building was torn down in the spring of 1936.
In the fall of 1934 she began to discuss life insurance with a friend who was an insurance agent. She was worried about her investments, which she had seen dwindle from about $100,000 to about $25,000. She had Moody's statistical service and knew a great deal about her investments and spent a great deal of time in study. She was upset about the dwindling of her investments. She asked her friend if there was anything in life insurance whereby she could conserve her principal if she sold the securities and liquidated them for their value. She subsequently liquidated the securities, realizing between $25,000 and $30,000 from them.
On December 6, 1935, the decedent executed a contract with the Connecticut General Life Insurance Co. of Hartford, Connecticut, sometimes hereinafter referred to as the company. On its face the contract was designated It was numbered 20348 and was on the regular standard from used by the company for writing annuity contracts. The material provisions were as follows:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY * * * HEREBY AGREES TO PAY at its Home Office in Hartford, Connecticut: to CECILE LE GIERSE (hereinafter called the Annuitant) A LIFE INCOME OF Forty-Nine and 15/100 DOLLARS Monthly beginning on the 6th day of January, 1936, provided the Annuitant be then living.
The consideration for this contract is the application, a copy of which is attached hereto and made a part of this contract, and the payment in advance of the Single Premium of $4,179.00.
* * * * * * *
General Provisions. This contract and the application therefor constitute the entire contract between the parties and all statements made in the application shall, in the absence of fraud, be deemed representations and not warranties. * * *
Reserve. The reserve on this contract is based on the Modified American Annuitants' Tables with interest at the rate of 3½% per annum.
The application for the contract was made by the decedent on December 6, 1935, and was headed "Application For An Annuity Contract in Connecticut General Life Insurance Company."
On the same day that the annuity contract was executed, December 6, 1935, the decedent also executed a policy or contract with the company for the face amount of $25,000 which was numbered 478327 and was designated on its face as "Single Premium Life Policy — Non-Participating." The policy was on the regular standard form used by the company for writing life insurance policies, and among other things provided:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY * * * HEREBY INSURES THE LIFE OF Cecile Le Gierse (hereinafter called the Insured) and agrees to pay at its Home Office in Hartford, Connecticut: Twenty-Five Thousand DOLLARS to Edyth LeGierse, daughter of the Insured, if she survives the Insured, (hereinafter called the Beneficiary), upon receipt of due proofs of the death of the Insured during the continuance of this contract. The right is reserved to the Insured to change the Beneficiary from time to time as hereinafter provided.
The consideration for this insurance is the application, a copy of which is attached hereto, and made a part of this contract, and the payment in advance of the single premium of $22,946.00.
This policy is issued and accepted subject to all the conditions and privileges set forth on the subsequent pages hereof, which are hereby made a part of this contract.
The "conditions and privileges" referred to in the preceding paragraph in so far as they are material to this proceeding are as follows:
Payment of Premium. The single premium is due and payable in advance * * *.
This policy shall not take effect until the policy has been delivered, and the single premium paid as above provided, during the lifetime and good health of the Insured.
Non-participation. This policy is not entitled to share in surplus distribution.
Incontestability. This policy shall be incontestable after it has been in force during the lifetime of the Insured for two years from its date of issue * * *.
Suicide. If within two years from the date of issue of this policy, the Insured shall die by his own hand or act, whether sane or insane, the liability of the Company shall be limited to the premium paid.
Rights reserved to the Insured. * * *
Beneficiary. * * *
Assignment. * * *
Loans. At any time during the continuance of this policy the Company will loan, upon the sole security and satisfactory assignment of the policy and the execution of proper loan agreement, a sum which with interest shall not exceed the cash value at the next policy anniversary. Interest on the loan shall be at the rate of 6% per annum payable annually on each anniversary date of the policy. * * *
Cash Value. Upon legal surrender of the policy at its Home Office, the Company will pay a cash value of the amount set forth in the Table of Cash or Loan Values. * * *
General Provisions. This policy and the application therefor constitute the entire contract between the parties and all statements made in the application shall, in the absence of fraud, be deemed representations and not warranties. * * *
The policy contained a "Table of Cash or Loan Values" for each $1,000 of face amount for a period of 14 years as follows:
------------------------------
Years | Cash value
------------------|-----------
1 _______________ | $782
2 _______________ | 816
3 _______________ | 862
4 _______________ | 871
5 _______________ | 880
6 _______________ | 889
7 _______________ | 897
8 _______________ | 905
9 _______________ | 912
10 ______________ | 919
11 ______________ | 926
12 ______________ | 932
13 ______________ | 937
14 ______________ | 942...To continue reading
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