Fid. Union Trust Co. v. Walsh.

• Citation: 56 A.2d 591
• Decision Date: 13 January 1948
• Docket Number: No. 7740.,7740.
• Parties: FIDELITY UNION TRUST CO. v. WALSH.
• Court: New Jersey Prerogative Court

56 A.2d 591

FIDELITY UNION TRUST CO.

v.WALSH.

No. 7740.

Prerogative Court of New Jersey.

Jan. 13, 1948.

Proceeding by the Fidelity Union Trust Company, executor of the last will of Elizabeth G. Taylor, deceased, and another against Frank E. Walsh, Director of the Division of Taxation, Department of Taxation and Finance, involving liability of the estate for transfer inheritance tax. From an adverse determination, the trust company and May Guthrie Goodwin appeal.

Annulment of assessment directed.

Syllabus by the Court

1. The determinant of the taxability of an inter vivos transfer as in contemplation of death is the motive, the intent and purpose of the transferor.

2. The object of the statute is to tax testamentary and intestate transfers and also inter vivos transfers which are in fact makeshifts employed to effectuate a purpose normally accomplished by will.

3. The statutory presumption of a testamentary motive in those cases where gifts are made within two years of death serves to place upon the representative of the estate the duty to come forward with contradictory evidence, but at the extremity of the proceeding, the burden reposes upon the taxing authority to establish by the fair preponderance of the evidence that the transfer was made as a substitute for testamentary disposition.

4. The taxing authority having failed to establish the taxability of the transfer, Held, the assessment under review should be cancelled.

Emerson, Emery & Danzig, of Newark (John M. Emery and Wallace R. Chandler, Jr., both of Newark, of counsel), for appellants.

Walter D. Van Riper, Atty. Gen., of New Jersey, and William A. Moore, Special Counsel, of Trenton, for respondent.

JAYNE, Vice Ordinary.

Since our heritage of life depends upon a tenancy from moment to moment, some contemplations of ultimate death, however extemporaneous, will presumably creep into the minds of everyone. I would suppose that one who has never conceived or cognitated in some jiffy an expectancy of eventual physical dissolution accepts a pathological faith in the occurrence of a miracle. True, there are those who apparently theorize that they have not exhausted life until they are convinced that life has exhausted them. But, however distant the date may seem to them to be, I fancy that they nevertheless comprehend that some day they will arrive at Jordan's bank.

And so, in the consideration of these inheritance tax appeals, I intrepidly confess that the protestations so often arrogated that the individual never entertained any introspections of prospective death are to me unimpressive. The contrary can in a reasonable measure be safely conceded by the appellants in these cases, because the mere circumstance that the decedent possessed an intellectual foresight capable of encompassing the inevitable eventualities of the future does not of itself render his or her inter vivos transfers necessarily subject to transfer inheritance taxation under the terms of our statute, N.J.S.A. 54:33-1 et seq.

The determinant of the taxability of an inter vivos transfer as in contemplation of death is the motive, the intent and purpose of the transferor. The premonitory consciousness of premature or imminent death is often diagnostic of the essence of the motive. The object of the statute is to tax testamentary and intestate transfers and 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. Accordingly, the facts of each case must be examined in the process of inclusion and exclusion. MacGregor v. Martin, 126 N.J.L. 492, 20 A.2d 427.

The present appeal does not seem to me to tender an issue of any special perplexity. An abridgement of the factual story will adequately fulfill the object of this announcement of my decision.

On December 14, 1944, one Elizabeth Guthrie Taylor, a resident of East Orange, Essex County, New Jersey, died testate at the age of seventy-two years. The net taxable estate transmitted by her will was valued at $287,319.10. On December 6, 1946, a transfer inheritance tax assessment was formulated by the taxing authorities which additionally enveloped certain property alleged to have been transferred by the decedent on March 5, 1943, in contemplation of death. The incorporation of the assets comprising the inter vivos assignment in the tax assessment constitutes the primary subject matter of this review.

A transcription of the significant paragraphs of the assignment of March 5, 1943, will be illuminative: ‘Know All Men by These Presents, That

‘Whereas, Walter Franklin Guthrie departed this life on the 31st day of December, 1942, resident in the City of East Orange, County of Essex and State of New Jersey, leaving a last will and testament dated the 9th day of July, 1929, which said will was duly admitted to probate before the Surrogate of the County of Essex, New Jersey, on the 21st day of January, 1943, and letters testamentary thereon were issued by said Surrogate on said date to Guaranty Trust Company of New York, the executor named in said will; and

‘Whereas, in and by Paragraph First of his said will the said Walter Franklin Guthrie did provide as follows: ‘First: I give, devise and bequeath all of my property and estate, real and personal, and wherever the same may be situated, in equal shares, to my sisters Elizabeth Guthrie Taylor of East Orange, New Jersey, and May Guthrie Goodwin of Grand Junction, Colorado; if either of my said sisters shall predecease me, then I give, devise and bequeath my said estate to the survivor.’; and ‘Whereas, said Elizabeth Guthrie Taylor and May Guthrie Goodwin, the two sisters of the testator named in the aforesaid will of the said testator, both survived him, and became entitled in equal shares to his residuary estate; and

‘Whereas, the said Elizabeth Guthrie Taylor and Elmer Z. Taylor, her husband, are childless, and both are fortunate in their financial circumstances, the said Elizabeth Guthrie Taylor having, in her own right, ample estate to provide for her own wants, and her said husband having substantial resources of his own, so that there will be no occasion for the said Elizabeth Guthrie Taylor to resort to her share of her said brother's estate so as aforesaid bequeathed to her,...