Voorhees v. Kelly

• Decision Date: 01 September 1942
• Docket Number: No. 6558.,6558.
• Citation: 132 N.J.Eq. 230,28 A.2d 61
• Parties: VOORHEES et al. v. KELLY, State Tax Com'r. In re VOORHEES' ESTATE.
• Court: New Jersey Supreme Court

28 A.2d 61

132 N.J.Eq. 230

VOORHEES et al.

v. KELLY, State Tax Com'r.In re VOORHEES' ESTATE.

No. 6558.

Prerogative Court of New Jersey.

Sept. 1, 1942.

Syllabus by the Court.

1. A survey of the legislation (N.J.S.A. 54:34-1, subd. c) and its evolution and an acquaintance with the adjudications necessitate the conviction that any inter vivos transfer which is in fact an intentional substitute for a testamentary transfer shall be subject to the tax.

2. The insistence that there is a presumption that a transfer made by a decedent more than two years before his death is not made by him in contemplation of death is untenable. In such event, there is no artificial presumption whatever. The determination of the fact must then be governed by the fair preponderance of the credible evidence.

3. Evidence considered, held: Decedent undoubtedly intended to accomplish by means of the trust agreement the transfer of a material portion of his estate for the benefit of persons who should have the maximum enjoyment of it after his death.

Proceeding in the matter of the estate of Stephen H. Voorhees, deceased, between Edward L. Voorhees and Helen G. Voorhees, executors of the last will and testament of Stephen H. Voorhees, and others, and William D. Kelly, State Tax Commissioner, involving propriety of assessment of tax on inter vivos transfer of property in trust allegedly made in contemplation of death.

Decree affirming assessment advised.

Walter E. Cooper, of Jersey City, for petitioners-appellants.

David T. Wilentz, Atty. Gen., and William A. Moore, Asst. Atty. Gen., for respondent.

JAYNE, Vice Ordinary.

The legislature of our state has ordained by statute that a transfer tax shall be levied upon real or tangible personal property within this state of a resident of this state or intangible personal property wherever situate of a resident of this state which is transferred by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor. N.J.S.A. 54:34-1, subd. c.

On February 11, 1940, Stephen H. Voorhees, a resident of Plainfield, New Jersey, died at the age of seventy-five years and six months. The executor of his will thereafter reported to the Inheritance Tax Bureau in response to the customary inquiry that on March 28, 1930, the decedent had executed an agreement by which he had transferred certain securities of the value of $460,000 and insurance policies on his life of the face value of $40,000 in trust for the use and enjoyment of designated beneficiaries. Exclusive of the proceeds of the insurance policies, the securities of the trust had a fair market value of $244,177.62 as of the date of the settlor's death. The net estate passing by testamentary disposition was valued at $231,942.52. The State Tax Commissioner has included in the taxable estate of this decedent the corpus of the inter vivos trust. The representatives of the estate desire the propriety of this assessment to be further explored. N.J.S.A. 54:34-13.

The inter vivos transfer, upon investigation, was deemed by the commissioner to have been made in contemplation of death. This is the rationale by which the assessment is defended by the respondent. The appellants propose that the transfer was not made by the decedent in contemplation of death within the signification of our statute. A procession of cases illustrative of transfers made in contemplation of death as well as those not so motivated can be seen in my opinion in Squier v. Martin, 131 N.J.Eq. 263, 24 A. 2d 865, joining which are the more recent proceedings in Kavanagh v. Kelly, 131 N.J. Eq. 398, 25 A.2d 547; Plum v. Martin, 132 N.J.Eq. 1, 26 A.2d 529, and Dommerich v. Kelly, N.J.Perog., 27 A.2d 871 (not yet reported) [in State Reports]. The field of statutory interpretation has now been quite thoroughly traversed. The authorities applicable to the taxation of such transfers need not be warmed over in the present memorandum. A survey of the legislation and its evolution and an acquaintance with the adjudications necessitate the conviction that any inter vivos transfer which is in fact a substitute for a testamentary (or intestate) transfer shall be subject to the tax.

The present appeal submits for decision a factual issue: Was the particular transfer accomplished by this decedent made by him in contemplation of death within the import and intendment of the statute? Circumstances of a revelatory nature in the pursuit of such an inquiry were outlined in Kavanagh v. Kelly, supra, and in Dommerich v. Kelly, supra.

The exhibits and other proofs have been studiously examined. In the present proceedings, the very character and prospective function of the trust indenture constitute the most persuasive evidential manifestation of the controlling and impelling purpose of the settlor. The settlor was sixty-five years of age and retired from business when he created the trust. The duration of the trust is measured by six lives in being, one of whom was then only nine years of age. More definitely described, the transfer required the income to be paid to the settlor's wife during her life or "until her remarriage." (Did the settlor contemplate that his wife would remarry before his death?) Upon her death or remarriage, there was to be paid annually out of income...