No. 81-174 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

IN THE MATTER OF THE TERMINATION OF 

JOINT TENANCY OF RONALD MILLER 

SINCLAIR, Deceased. 

Appeal from: District Court of the Eighteenth Judicial 

District, 

In and for the County of Gallatin, 

Honorable Joseph B. Gary, Judge presiding. 

Counsel of Record: 

For Appellant: 

Bolinger & Higgins, Bozeman, Montana 

For Respondent : 

Mike Rieley, Dept. of Revenue, Helena, Montana 

Submitted on briefs: November 18, 1981 

Decided: February 18, 1982 

Filed: 
Mr. Justice Fred J. Weber delivered the Opinion of the 

Court . 

Mrs. Jane Sinclair, the widow of Ronald Sinclair, 

deceased, appealed to the District Court of the Eighteenth 

Judicial District from a determination by the Department of 

Revenue (Department) that inheritance tax was due as a 

result of transfers in contemplation of death. The District 

Court affirmed the Department's determination. We reverse 

the District Court. 

Mr. and Mrs. Sinclair, husband and wife, had a joint 

tenancy bank account for many years. Mr. Sinclair became 

ill. Mrs. Sinclair withdrew $55,000 from the account, and 

obtained one $5,000 joint tenancy Federal Credit Bond with 

one sister and a $25,000 joint tenancy Treasury Note with 

each of two other sisters. Mrs. Sinclair was named as a 

joint tenant on each instrument with one of her sisters. 

The District Court found that the money was to be used by 

the sisters-in-law to pay for the expenses of Mr. Sinclair 

in the event that Mrs. Sinclair became incapacitated. Mr. 

Sinclair died within three years of the transfer. The bond 

and notes had not been cashed at his death. Mrs. Sinclair 

has since cashed the $5,000 bond for herself and has always 

had possession of the two notes. Mr. Sinclair had no part 

in transferring the funds. 

The Department contends that as a result of transfers 

in contemplation of death to the sisters of Mrs. Sinclair, 

an inheritance tax is due in the total amount of $2,182.25. 

The Department bases its contention on section 72-16- 

301, MCA, which provides in part: 

"A tax shall be and is hereby imposed upon 

any transfer of property, real, personal, 

or mixed or any interest therein or income 
therefrom in trust or otherwise to any person, 

association, or corporation in the following 

cases, except as hereinafter provided: 

"(3) when -- the transfer -- is of property made 

-- by a resident or by a nonresident when such 

nonresident's property is within the state 

or within its jurisdiction by deed, grant, 

bargain, sale, or gift made in contemplation 

of the death of the grantor, vendor, or donor or intended to take effect in 

or enjoyment at or after such death. Every 

transfer by deed, grant, bargain, sale, or 

gift made within 3 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 a fair consideration in money 

or money's worth shall, unless shown to the 

contrary, be deemed to have been made in 

contemplation of death within the meaning 

of this section, but no such transfer by 

deed, grant, bargain, sale, or gift made before such 3 year period shall be treated as 

having been made in contemplation of death." 

(Underscoring added.) 

The funds were not transferred to the new joint tenancy 

bond or notes by Mr. Sinclair but rather by Mrs. Sinclair. 

The Department contends that Mrs. Sinclair was acting for 

her husband and it was as if he transferred the funds. The 

Department and the District Court relied upon Haneke v. 

United States (4th Cir. 1977), 548 F.2d 1138. The factual 

situation in Haneke was similar to the present situation. 

The husband established five savings accounts in joint 

tenancy with his wife. The husband became ill, and the 

wife, in order to take care of him if anything should happen 

to her, transferred funds from the joint tenancy accounts 

with her husband to joint tenancy accounts with her sisterin-law. This was without the husband's consent or knowledge. 

He died within three years of the transfer. The court in 

Haneke held that the transfers were made in contemplation of 

death and were includable in the decedent's gross estate for 

Federal Estate Tax purposes under Section 2035 of the Internal 
Revenue Code. The court rejected the argument that the 

funds could not be included in the husband's estate because 

the wife, not her husband, had made the transfers. The 

court stated that "Mrs. Haneke was acting as her husband's 

alter ego, and consequently, her intention should be imputed 

to him." Haneke, 548 F.2d at 1140. In support of its 

holding the 4th Circuit Court cited City Bank Farmers Trust 

Co. v. McGowan (1945), 323 U.S. 594, 65 S.Ct. 496, 89 L.Ed. 

483. In that case a woman had been adjudicated an incompetent 

by the New York Supreme Court, and a committee was appointed 

to care for her property. The court directed the committee 

to pay large yearly allowances to certain relatives. These 

transfers were found to be made in contemplation of death 

even though the decedent did not make the transfers. The 

court held "that where, as in New York, the court is to 

substitute itself as nearly as may be for the incompetent, 

and to act upon the same motives and considerations as would 

have moved her, the transfer is, in legal effect, her act 

and the motive is hers." -- City Bank Farmers Trust Co., - 323 

U.S. at 599, 65 S.Ct. at 498, 89 L.Ed. at 489. 

As the decision is by the Fourth Federal Circuit, 

Haneke is not binding upon this Court, except to the degree 

that the reasoning of the decision appears compelling. We 

disagree with the basic determination in Haneke and do not 

find that City Bank Farmers Trust - Co. is authority for its 

conclusion. City Bank Farmers Trust - Co. held that the 

actions of a court-appointed committee acting in the capacity 

of conservator and guardian of the assets of an incompetent 

are the equivalent of actions by the incompetent himself, so 

that transfers made by the committee were considered to be 

in contemplation of death in the same manner as though the 

incompetent himself had made the transfers. That analysis 
is appropriate. However, Haneke extended this theory to 

transfers by a joint tenant from a bank account with one 

joint tenant acting as the alter ego of the other joint 

tenant. ~egardless of the intention on the part of Mrs. 

Sinclair at the time she withdrew the $55,000, Mrs. Sinclair 

thereby did not become an alter ego or agent of her husband. 

As a joint tenant, Mrs. Sinclair had the right to withdraw 

funds from the account at any time, and under the Montana 

Inheritance Tax Law, the intention or purpose at the time of 

withdrawal is not controlling for the determination of 

inheritance tax. Because the rationale of Haneke is not 

appropriate in Montana, we do not adopt it as authority. 

The facts here show that the critical step for inheritance tax purposes was the withdrawal by Mrs. Sinclair of 

the $55,000. That is the taxable event, if any. By the 

withdrawal of the $55,000, Mrs. Sinclair acquired full 

dominion over the money and terminated any joint tenancy 

interest on the part of her husband. Casagranda v. Donahue 

(1978), 178 Mont. 479, 483, 585 P.2d 1286, 1288. Our key 

question therefore becomes whether the withdrawal of the 

$55,000 is taxable under Montana inheritance tax law. Under 

section 72-16-313 (1) , MCA, a transfer to a spouse is not 

taxable. As a result, the withdrawal of funds by Mrs. 

Sinclair, although made within three years of death, is not 

a taxable transfer. 

After withdrawal, Mrs. Sinclair used the $55,000 for 

the acquisition of the bond and notes which she placed in 

joint tenancies in her name and that of her three sisters. 

The steps taken in the acquisition of the bond and notes do 

not constitute transfers from the deceased to anyone, and 

therefore are not transfers subject to Montana inheritance 

tax. 
We reverse the District Court, and remand with instructions to enter an appropriate order showing no inheritance 

tax due. 

We Concur: 

34w4.J ~&a.A?Q 

Chief .Justice 

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