State v. Ebeling (In re Ebeling's Estate)

• Decision Date: 27 May 1919
• Parties: IN RE EBELING'S ESTATE. STATE ET AL. v. EBELING ET AL.
• Court: Wisconsin Supreme Court

169 Wis. 432

172 N.W. 734

IN RE EBELING'S ESTATE.

STATE ET AL.

v.EBELING ET AL.

Supreme Court of Wisconsin.

May 27, 1919.

Appeal from Circuit Court, Brown County; Henry Graass, Judge.

In the matter of the estate of John H. Ebeling, deceased. Proceedings to determine inheritance. Judgment of county court determining that certain gifts were not subject to the tax was affirmed by the circuit court on appeal, and the State and County appeals. Reversed and remanded, with directions.

The county court of Brown county, in determining the amount upon which inheritance taxes imposed upon the estate of John H. Ebeling, deceased, should be computed, deducted the amount of the federal estate tax imposed upon the estate, and determined that certain gifts made by decedent within six years prior to his death were not subject to an inheritance tax. The state and county appealed from the judgment to the circuit court for Brown county, where the judgment of the county court was affirmed. From such judgment the state and county appealed.

The estate was valued at $332,819.33. $12,779.37, the amount of the federal estate tax, was deducted from this amount in determining the amount upon which the inheritance tax should be computed. The deceased died January 15, 1918. He had three children. Within six years prior to his death he made gifts to them as follows: December 22, 1912, $1,000 to each; November 22, 1912, $1,000 to each; October 31, 1913, $500 to each; December, 1913, $200 to each; May, 1916, $500 to each; June 30, 1917, $10,000 to each; August 18, 1917, $5,318.33 to each; and October 1, 1917, $10,000 to each.

The court found that neither of said gifts nor all of them combined constituted a material part of the estate of said testator; that neither of said gifts nor all of them together was or were made in the nature of a final disposition or distribution of said testator's estate; that no one of said gifts was made by said testator in contemplation of death; and, further, that if the law raised any presumption as to any of such gifts that they were made in contemplation of death, said presumption is fully overcome by the evidence in the case.John J. Blaine, Atty. Gen., E. E. Brossard, Asst. Atty. Gen., and Wm. Cook, Dist. Atty., of Green Bay, for appellants.

Samuel D. Hastings, of Green Bay, for respondents.

OWEN, J. (after stating the facts as above).

It has been held in Re Estate of Andrew R. Week, deceased, 172 N. W. 732, decided herewith, that the federal estate tax is not a proper deduction in determining the amount upon which the state inheritance tax should be computed. The county court erroneously allowed this deduction.

Prior to the enactment of chapter 643, Laws of 1913, section 1087--1, Stats., imposed a tax upon three classes of transfers of property: (1) By will; (2) by intestate laws; and (3) by gifts made in contemplation of death of the donor or intended to take effect in possession or enjoyment at or after such death. Chapter 643 of the Laws of 1913 amended this section by adding at the end of subdivision 3 the following:

“Every transfer by deed, grant, bargain, sale or gift, made within six years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall be construed to have been made in contemplation of death within the meaning of this section.”

The state contends that the amendment makes every gift of a material part of the estate of a deceased person, when made within six years prior to death, subject to an inheritance tax. It is the contention of the respondents that the amendment does not have such conclusive effect, and that it accomplishes no more than to make the gift, when made within six years prior to death, prima facie evidence of the fact that it was made in contemplation of death, thereby shifting the burden of proof upon that question.

In the case of State v. Thompson, 154 Wis. 320, 142 N. W. 647, 46 L. R. A. (N. S.) 790, Ann. Cas. 1915B, 1084, this court had under consideration the question of inheritance taxes due from the estate of one Joseph Dessert, who died at the age of 92. Practically his entire estate was devised to his only daughter and sole heir, Stella D. Thompson. She took by the will about $200,000. During the last 6 years of his life he gave her approximately a half million dollars, mainly in two gifts, one made 3 years and the other 4 1/2 years prior to his death. This court held that the gifts were not subject to inheritance taxes. The circumstances of that case forcibly brought to the attention of the Legislature the fact that, after a person had attained the age of 89 years, an age when he could not expect to live many more years, when his thoughts naturally were consumed rather with the disposition of property already accumulated than with the accumulation of more, he could bestow his property upon the objects of his bounty, and thus evade the inheritance tax. This decision was rendered May 31, 1913. The Legislature was then in session. Ten days thereafter Senate Bill No. 575 was introduced by the joint committee on finance. This bill, without amendment, was approved July 21st, and became chapter 643 of the Laws of 1913.

Now the question is this: Did the Legislature intend to make gifts and transfers of property made within 6 years prior to death, absolutely...