Heffernan v. New Britain Bank and Trust Co.

• Decision Date: 25 April 1978
• Citation: 175 Conn. 8,392 A.2d 481
• Court: Connecticut Supreme Court
• Parties: Gerald J. HEFFERNAN, Tax Commissioner v. NEW BRITAIN BANK AND TRUST COMPANY, Executor (ESTATE of Elemina M. SAMUELSON) et al.

Page 481

392 A.2d 481

175 Conn. 8

Gerald J. HEFFERNAN, Tax Commissioner v. NEW BRITAIN BANK AND TRUST COMPANY, Executor (ESTATE of Elemina M. SAMUELSON) et al.

Supreme Court of Connecticut.

Argued Jan. 10, 1978.

Decided April 25, 1978.

John M. Dunham, Inheritance Tax Atty., Hartford, with whom, on the brief, were Carl R. Ajello, Atty. Gen., and Robert J. Hale, First Asst. Tax Commissioner, Hartford, for appellant (plaintiff).

D. J. Harry Webb, Jr., for appellees (defendants).

Before HOUSE, C. J., and LOISELLE, BOGDANSKI, LONGO and HEALEY, JJ.

LOISELLE, Associate Justice.

The tax commissioner has appealed from a judgment of the Superior Court concerning the taxability, under General Statutes §§ 12-343 and 12-341b(d), of certain joint bank accounts with rights of survivorship. The relevant facts, stipulated to by the parties and incorporated into the finding by the court, are as follows: Elemina M. Samuelson (hereinafter the decedent) and Mildred A. Samuelson (hereinafter the survivor), sisters, lived together in a jointly owned home in New Britain. Prior to her death, the decedent created six joint bank accounts, with the right of survivorship, in the name of herself and the survivor. These bank accounts aggregated $71,923.55 and were reported as items one through six on schedule 7C of the succession tax return as being fractionally taxable. The decedent made all the contributions to these accounts. The survivor created five joint bank accounts, with the right of survivorship, in the name of herself and the decedent, totaling $50,623.38, which accounts were reported as items 7 through 11 on schedule 7C as being fractionally taxable. The survivor made all the contributions to these accounts.

All of the passbooks were kept in a box in their home and the box was accessible to both sisters. Each sister was aware of the creation and existence of all the accounts. The survivor did not contribute to or withdraw from the accounts created by the decedent, nor did the decedent contribute to or withdraw from the accounts contributed to by the survivor. Each, on occasion, would withdraw from an account or accounts contributed to by her and spend the funds for a common purpose.

In a letter to the executor of the decedent's estate, the survivor wrote that the accounts to which she alone contributed had the decedent's name placed thereon in case she could not bank for herself and that it was understood by the decedent that the monies in those accounts were to be used only for the expenses of the survivor and that the decedent could withdraw only with the survivor's permission. The survivor has verbally stated that the decedent's practice was the same with respect to the accounts to which the decedent contributed solely.

Each sister reported the income, for income tax purposes, only on the accounts to which she contributed, except for one account to which the survivor contributed solely but on which the decedent reported the income for income tax purposes. Each sister had adequate resources for her own support.

Neither party challenges the court's decision that those accounts to which the survivor alone contributed are fractionally taxable pursuant to General Statutes § 12-343. The only issue on appeal to this court is, therefore, whether those accounts to which the decedent was the sole contributor are fractionally taxable, pursuant to General Statutes § 12-343, as the trial court concluded, or, whether they are taxable in their entirety, pursuant to General Statutes § 12-341b(d), as the plaintiff claims.

General Statutes § 12-343 provides in part that "(w)henever property is held in the joint names of two or more persons and the survivor or survivors of them, the right of the survivor or survivors to the immediate ownership or possession and enjoyment of such property shall be a taxable transfer." As this court stated in McLaughlin v. Estate of Cooper, 128 Conn. 557, 561, 24 A.2d 502, 504, it is "(t)he right which a survivor has, on the death of one of those in whose names the account stands, to succeed to the property (which) is such an interest passing by death as to be properly subject to the succession tax." Under this provision, the tax is computed "as though a fractional part of the property, determined by dividing the fair market value of the entire property by the number of persons in whose joint names it was held, belonged absolutely to the deceased person." Thus, the amount subject to taxation pursuant to § 12-343 is that amount which, under the statute's theory, accrues to the survivor upon the decedent's death.

By its very terms, however, this provision does not "prevent the taxability, in whole or in part, under the provisions of subsection (c) or (d) of § 12-341 or 12-341b of any property held in the joint names of two or more persons and the survivor of them, including any joint checking or savings account." It is the tax commissioner's claim that those accounts to which the decedent alone contributed are subject to taxation in their entirety, pursuant to § 12-341b(d). This provision provides for the taxation of transfers "by gift or grant intended to take effect in possession or enjoyment at or after the death of the transferor." The basis of this tax is the "succession to possession and enjoyment of property." Walsh v. Hall, 131 Conn. 345, 347, 39 A.2d 889, 890. Here, "the right which is taxed is not created by death but only ripens into possession or enjoyment upon the occurrence of that event." Blodgett v. Union & New Haven Trust Co., 111 Conn. 165, 170, 149 A. 790, 792. The tax, in reaching the "shifting of the enjoyment of property," distinguishes between the vesting in title and the taking effect in possession and enjoyment. Selvin, "The Possession or Enjoyment Clause of the Connecticut Succession Tax," 23 Conn.B.J. 11, 16.

In determining whether property is subject to taxation pursuant to § 12-341b(d), the question to be addressed is whether the transferor Intended that possession and enjoyment not take effect until his or her death. "(T)he intent and the taking effect in possession or enjoyment must be causally related. That is, the taking effect in possession or enjoyment of the property transferred must be caused by an Intentional act of the transferor." (Emphasis added.) Archibald v. Sullivan, 152 Conn. 663, 668, 211 A.2d 692, 694; Connelly v. Waterbury National Bank, 136 Conn. 503, 508, 72 A.2d 645. The transferor must intend for his or her death to be "the necessary factor to effectuate the transfer" of possession and enjoyment. See Pape v. Sullivan, 151 Conn. 39, 44, 193 A.2d 480; Fabian v. Walsh, 134 Conn. 456, 459, 58 A.2d 384, 386. The question of intention is one of fact, to be determined by reference to the particular facts of each case. Wilhelm, Conn. Estates Practice (Death Taxes) (Rev.Ed.) § 42.

This court has only once addressed the specific issue now before the court: whether joint bank accounts in the name of a decedent-contributor and a survivor are fractionally taxable under § 12-343 or whether they are taxable in their entirety under § 12-341b(d). In Walsh v. Hall, s...