In re Pyle's Estate
| Decision Date | 04 February 1963 |
| Docket Number | No. 13931.,13931. |
| Citation | 313 F.2d 328 |
| Parties | In re ESTATE of Ida Jarvis PYLE. Robert M. PYLE, Executor, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — Third Circuit |
Arthur L. Nims, III, Newark, N. J. (McCarter & English, Newark, N. J., on the brief), for petitioner.
Morton K. Rothschild, Dept. of Justice, Washington, D. C. (Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., on the brief), for respondent.
Before STALEY, HASTIE and SMITH, Circuit Judges.
The Tax Court has held that the proceeds of an insurance policy on the life of Wallace Pyle are includible in the gross estate of his widow, Ida Pyle, who has since died, as property which she transferred, reserving a life estate, within the meaning of section 2036 of the 1954 Internal Revenue Code. This ruling resulted in a determination of an estate tax deficiency. The executor of Mrs. Pyle's estate has brought the case here for review.
Mrs. Pyle applied for and obtained a $30,000 insurance policy on her husband's life, payable on his death to her. The policy granted Mrs. Pyle all the rights accorded the "insured" under the policy and she was the named beneficiary. Thus, it is clear that when the policy was issued Mrs. Pyle alone enjoyed the various incidents of ownership, including the rights of borrowing, assignment and cash surrender. She also had the right to change the beneficiary and to elect among settlement alternatives.
At Mrs. Pyle's request, during the life of her husband, a rider was attached to the policy providing that, upon the death of the insured husband, the proceeds would be retained by the company which would pay Mrs. Pyle 3% interest thereon, plus dividends, for the remainder of her life. Thereafter, the earnings, and ultimately the proceeds of the policy, were to be paid to her children. Mrs. Pyle reserved the right to revoke and change this revised method of settlement until the death of her husband, but did not do so. Upon the husband's death, the revised scheme of settlement became irrevocable.
Section 2036 of the 1954 Code requires that there shall be included in the gross estate of a decedent the value of "any interest in property * * * of which the decedent has at any time made a transfer * * * under which he has retained for his life * * * the right to income from, the property * * *." The Tax Court concluded that, in the circumstances outlined above, Mrs. Pyle's action during the lifetime of her husband in changing the disposition to be made of the proceeds of the life insurance policy upon maturity constituted a transfer of property under which she retained a life estate.
Challenging this conclusion, the petitioner argues that it was the death of the insured husband rather than the earlier action of Mrs. Pyle which in legal contemplation effected the transfer of property. The fact that Mrs. Pyle's election as to the disposition of proceeds at maturity was revocable until her husband died and that interests in such proceeds were contingent or inchoate until her husband's death are thought to support this contention.
We think petitioner's argument is unsound. The only transfer of property with which we are concerned is the transfer of the right to receive proceeds upon maturity. That transfer could be accomplished only through the exercise of ownership rights created by the terms of the policy and vested exclusively in Mrs. Pyle from the date of issuance until her husband's death. The fact that the husband's death was the event which caused the policy to mature and made Mrs. Pyle's election as to changes in the disposition of the proceeds irrevocable did not make him a transferor. For he had no power over the disposition...
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United States Nat'l Bank v. Comm'r of Internal Revenue (In re Estate of Margrave)
...of the trust itself, extinguished at the moment of his death. See Estate of Pyle v. Commissioner, 36 T.C. 1017, 1020 (1961), affd. 313 F.2d 328 (3d Cir. 1963). This simply does not constitute an incident of ownership. Respondent next contends that decedent's power to modify or revoke the tr......
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Muhm v. Comm'r of Internal Revenue (In re Estate of Johnson)
...being perfected at some later date”; i.e., at the date of death. Estate of Pyle v. Commissioner, 36 T.C. 1017, 1020 (1961), affd. 313 F.2d 328 (3d Cir. 1963). The term “inchoate” is defined in Black's Law Dictionary (5th ed.) as “imperfect; partial; unfinished; begun, but not completed.” Ho......
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...1947), cert. denied, 334 U.S. 843, 68 S.Ct. 1510, 92 L.Ed. 1767 (1948); Marks v. Higgins, 213 F.2d 884 (2d Cir. 1954); In re Pyle's Estate, 313 F.2d 328 (3d Cir. 1963). The government also asserts that Goodnow v. United States, 302 F.2d 516, 157 Ct.Cl. 526 (1962), supra, in principle suppor......
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