Title: Estate of Evans v. Dept. of Rev.
Citation: N/A
Docket Number: S067899
State: Oregon
Issuer: Oregon Supreme Court
Date: July 29, 2021

430	
July 29, 2021	
No. 33
IN THE SUPREME COURT OF THE 
STATE OF OREGON
ESTATE OF HELENE J. EVANS,
Plaintiff-Appellant,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant-Respondent.
(TC 5335) (SC S067899)
En Banc
On appeal from the Oregon Tax Court.*
Argued and submitted May 6, 2021.
Timothy R. Volpert, Tim Volpert PC, Portland, argued 
the cause and filed the briefs for appellant. Also on the briefs 
was Carol Vogt Lavine, Carol Vogt Lavine LLC, Milwaukie.
Peenesh Shah, Assistant Attorney General, Salem, 
argued the cause and filed the brief for respondent. Also 
on the brief were Ellen F. Rosenblum, Attorney General, 
Benjamin Gutman, Solicitor General.
FLYNN, J.
The judgment of the Tax Court is affirmed.
______________
	
*  Unpublished decision issued May 8, 2020.
Cite as 368 Or 430 (2021)	
431
432	
Estate of Evans v. Dept. of Rev.
	
FLYNN, J.
	
This case reaches us on direct appeal from a deci-
sion of the Oregon Tax Court. The estate of Helene Evans, a 
deceased Oregon resident, challenges the Tax Court’s deter-
mination that the Department of Revenue lawfully included 
in Evans’s taxable Oregon estate the principal assets of a 
Montana trust, of which Evans had been the income ben-
eficiary. Although Evans had a right to receive—and had 
received—income generated by those assets during her 
lifetime and potentially had the right to tap the assets 
themselves, the estate (plaintiff) asserts that she had not 
owned and had had no control over the assets. Under those 
circumstances, plaintiff argues, Oregon did not have the 
kind of connection to the trust assets that the Due Process 
Clause of the Fourteenth Amendment to the United States 
Constitution requires for a state to impose a tax on a person, 
property, or transaction. We conclude that Oregon’s imposi-
tion of its estate tax on the trust assets in this case comports 
with the requirements of due process. We, therefore, affirm 
the judgment of the Tax Court.
BACKGROUND
	
At the time of her death, Helene Evans was a life-
time beneficiary of a trust (the Gillam trust) that had been 
created upon the death of her husband, Donald Gillam. 
After Evans herself died in 2015, having lived in Oregon 
since 2012 when the trust was created, the present dispute 
arose over whether Oregon can enforce its statutory require-
ment that the value of the assets that were held in the trust 
must be included in Evans’s taxable estate. Because that 
tax arises from the intersection of Oregon and federal estate 
tax law, we briefly describe the applicable provisions.
	
Under federal estate tax law, there can be no mari-
tal deduction for property passing from the decedent to his or 
her spouse when what is passed to the spouse is a mere “ter-
minable interest” in the property, which would include an 
income interest or other interest in property held in a trust 
that terminates upon the spouse’s death. 20 USC § 2056(b)
(1). The Internal Revenue Code provides an exception to 
that rule if the property is “Qualified Terminable Interest 
Property” (QTIP), as defined at 26 USC § 2056(b)(7). Under 
Cite as 368 Or 430 (2021)	
433
that provision, a terminable interest passing to a decedent’s 
spouse constitutes QTIP if three conditions are met: (1) the 
surviving spouse must be entitled to all the income from the 
property for life; (2) no person can have a power to direct 
any part of the property to any person other than the sur-
viving spouse; and (3) the decedent’s executor has made an 
election to designate the property as QTIP. Such an election 
allows the property to escape taxation as part of the dece-
dent’s estate, but any property deducted from the decedent’s 
estate as QTIP must, upon the surviving spouse’s death, 
be included in, and taxed as part of, the spouse’s estate. 26 
USC § 2044.1
	
Thus, for federal tax purposes, property that was 
designated as QTIP and thus excluded from a decedent’s 
estate under 26 USC § 2056(b)(7) must be included in the 
surviving spouse’s federal estate upon his or her death. 26 
USC § 2044. And Oregon law provides that, for purposes 
of Oregon taxes, a resident decedent’s taxable estate is the 
same as his or her federal taxable estate, taking into account 
any Oregon modifications. ORS 118.010(3).
	
Returning to the facts of this case, Gillam’s will had 
provided that, upon his death, certain of his assets—including 
 
stocks, bonds, and similar intangible property held in 
Montana banks and investment firms—would be placed 
in a testamentary trust established under Montana law, 
which would be administered by a single trustee (his son, 
a Montana resident). The will also provided that Evans and 
other designated persons would receive the income gener-
ated by the trust, along with such portions of the principal 
as the trustee, in his sole discretion, deemed appropriate 
after consulting with Evans about the needs of the various 
beneficiaries; that Gillam’s executor could elect to qual-
ify all or part of the trust for the marital deduction from 
	
1  A prominent treatise on tax law explains that 
“[t]he principal consequence of the QTIP election is that the property remain-
ing at the surviving spouse’s death must be included in the spouse’s gross 
estate. Sections 2056(b)(5) and (7) essentially allow the marital deduction on 
the condition that the property be subject to gift or estate tax when it passes 
from the spouse to someone else.”
Boris Bittker & Lawrence Lokken, Federal Taxation of Income, Estates and Gifts 
§ 129.3 (3d ed 2019) (emphasis added).
434	
Estate of Evans v. Dept. of Rev.
federal or state estate taxes; and that, upon Evans’s death, 
the remaining assets of the trust would be divided among 
Gillam’s children.
	
Gillam died in 2012 as a resident of Montana, a few 
weeks after Evans had moved from that state to Oregon. 
Upon Gillam’s death, his executor transferred the intangi-
ble property that had been designated in Gillam’s will to 
the trust. Wishing to make the election that would qual-
ify the trust for the federal estate tax marital deduction, as 
contemplated in the will, the executor petitioned a Montana 
court to reform the will and modify the trust in a way that 
would support that election.
	
To allow the election that Gillam’s executor sought, 
the Montana court agreed to reform Gillam’s will and mod-
ify the Gillam Trust so that the trust property met the 
statutory requirements for designation as QTIP. Under the 
modifications that were approved, the trustee was required 
to pay all of the net income from the trust to Evans, as well 
as “such amounts from the principal” as the trustee deemed 
necessary for Evans’s “health, education, maintenance, 
or support” in her “accustomed manner of living,” during 
Evans’s lifetime. The trustee was prohibited from distribut-
ing either trust income or principal to any person other than 
Evans during her lifetime; but, upon Evans’s death, he was 
to distribute the principal to Gillam’s children. And upon 
Evans’s death, the trustee was to pay, out of the trust prin-
cipal, the “federal and state death taxes * 
* 
* imposed by any 
jurisdiction by reason of [Evans’s] death and with respect to 
any property included in th[e] trust.”
	
Once the trust had been modified, Gillam’s execu-
tor elected to designate the trust property as QTIP, and the 
property was excluded from Gillam’s estate for purposes of 
the federal estate tax. The QTIP designation had no effect 
on taxes paid to the state of Montana, because Montana 
does not have an estate tax.
	
During Evans’s life, there was one significant 
change with respect to her interest in the trust. At some 
point, a dispute arose between Evans and the trustee about 
how much of the trust principal should be distributed to 
Cite as 368 Or 430 (2021)	
435
Evans, in addition to the trust income, to maintain her 
accustomed manner of living. Although, under the terms 
of the trust, the amount of any such distributions from 
principal was within the trustee’s sole discretion, Evans 
had a right under Montana law to require the trustee to 
make the trust property productive of income or convert it 
to productive property, if the amounts that the trustee dis-
tributed to her were “insufficient to provide [her] with the 
beneficial enjoyment required to obtain the marital deduc-
tion.” Montana Code Annotated (MCA) § 72-34-445. In 2014, 
Evans and the trustee entered into a settlement agreement 
whereby Evans released her rights under MCA § 72-34-445, 
along with her right under the trust terms to receive distri-
butions from principal to maintain her accustomed manner 
of living (as deemed necessary by the trustee), in exchange 
for a single lump sum payment of $750,000 from the trust 
principal and stipulated monthly payments of $10,833.33 for 
her lifetime.2
	
When Evans herself died in Oregon in 2015, plain-
tiff initially filed an Oregon estate tax return that included 
the value of the assets that were held in the trust. In doing 
so, plaintiff was following the requirement of ORS 118.010(3) 
that a decedent’s taxable estate is generally the same as his 
or her federal taxable estate.
	
Later, after paying the total tax liability on the 
estate as set out in the initial estate tax return, plaintiff 
sought to revise the return to exclude the value of the prin-
cipal assets of the Gillam Trust and requested a refund of 
the tax that had been paid on those trust assets. Plaintiff 
argued that, regardless of what ORS 118.010(3) and other 
Oregon tax statutes might require, imposing Oregon’s estate 
tax on the assets of the trust, when Oregon’s sole connection 
to those assets was through Evans, who had never owned 
or controlled them but had merely received income from 
them, violated the Due Process Clause of the Fourteenth 
Amendment. The Department of Revenue rejected that 
due process argument and denied the requested revision 
and refund (except for a small amount relating to legal 
 
fees).
	
2  Evans paid Oregon income tax on those distributions from the trust.
436	
Estate of Evans v. Dept. of Rev.
THE TAX COURT DECISION
	
Plaintiff appealed to the Tax Court, and both plain-
tiff and the department filed motions for summary judgment. 
The Tax Court granted the department’s motion and denied 
plaintiff’s motion, explaining its decision in an unpublished 
order. The Tax Court first observed that, under the stan-
dard articulated by the United States Supreme Court, a tax 
imposed by a state does not offend the Due Process Clause 
if: (1) there is some minimum link or connection between the 
state and the person, property or transaction it seeks to tax; 
and (2) there is a rational relationship between the taxable 
item and the values and benefits that the taxing state pro-
vides. Estate of Helene J. Evans v. Dept. of Rev., TC 5335, 7-8 
(Or Tax, May 28, 2020) (summarizing North Carolina Dept. 
of Rev. v. The Kimberley Rice Kaestner 1992 Family Trust, 
__ US __, 139 S Ct 2213, 2219-20, 204 L Ed 2d 621 (2019)). 
Addressing the first requirement, the Tax Court opined that, 
under Curry v. McCanless, 307 US 357, 59 S Ct 900, 83 L 
Ed 1339 (1939)—a case involving a state’s imposition of its 
estate tax on intangible trust property, the income from 
which a deceased domiciliary of the state had had a lifetime 
interest—”the requisite minimum connection to impose an 
estate or inheritance tax always exists between the state 
of a person’s domicile and the rights that the person holds 
in intangible property.” TC 5335 at 10. The court explained 
that the required minimum connection existed between the 
trust property and Oregon (Evans’s state of domicile) due 
to Evans’s “exclusive lifetime interest” in the trust. Id. at 
10-11. Turning to the second, “rational relationship” require-
ment, the Tax Court cited Curry and another estate tax case 
involving similar facts, Whitney v. State Tax Commission of 
New York, 309 US 530, 60 S Ct 635, 84 L Ed 909 (1940), for 
the proposition that the Due Process Clause permits impo-
sition of an estate or transfer tax on the “full value” of trust 
assets that are acquired by one person “ 
‘through the death of 
another person,’ 
” even when the decedent had had no “bene-
ficial interest” in the assets themselves. TC 5335 at 12 (quot-
ing Whitney, 309 Or at 538 (emphasis added by Tax Court)). 
The Tax Court concluded that those cases were on all fours 
with the present case and that, as such, the rational relation-
ship requirement also had been satisfied. TC 5335 at 11-16.
Cite as 368 Or 430 (2021)	
437
PLAINTIFF’S ARGUMENTS
	
Before this court, plaintiff argues that the Tax 
Court mischaracterized the due process cases on which it 
relied. It contends that those same cases—and others—
show that the Due Process Clause does not permit a state 
to impose an estate tax on intangible trust assets solely on 
the ground that a deceased resident of the state had enjoyed 
the income generated by those assets during her lifetime—
unless the decedent had had some practical control of the 
assets during her lifetime. Plaintiff insists that Evans had 
no such control of the assets of the Gillam Trust and, there-
fore, her death as an Oregon resident did not establish the 
kind of link between Oregon and those trust assets that the 
Due Process Clause requires. Neither, plaintiff argues, can 
Oregon rely on the federal requirement that the trust assets 
must be treated as part of Evans’s property for purposes of 
the federal estate tax (because of the QTIP election), since 
that federal requirement is simply a legal fiction and does 
not establish Evans’s actual control, possession, or enjoy-
ment of the trust assets.
ANALYSIS
	
We begin by emphasizing that plaintiff does not 
challenge the department’s statutory obligation under ORS 
18.010(3) to include the trust assets in Evans’s Oregon tax-
able estate. Plaintiff’s sole argument is that doing so vio-
lates the Due Process Clause. To respond to that argument, 
we first consider general due process limitations on a state’s 
taxing authority and then turn to an application of those 
principles in the circumstance of this case.
	
The Due Process Clause prohibits governmental 
action that “deprive[s] any person of life, liberty or prop-
erty, without due process of law.” Implicit in the clause is 
a requirement that the state exercise its authority only in 
ways that are consistent with “traditional notions of fair 
play and substantial justice.” Milliken v. Meyer, 311 US 457, 
463, 61 S Ct 339, 85 L Ed 278 (1940).
	
With respect to a state’s authority to impose any 
kind of tax, the essential due process issue is whether the 
tax “bears fiscal relation to protection, opportunities and 
438	
Estate of Evans v. Dept. of Rev.
benefits given by the state,” i.e., “whether the state has 
given anything for which it can ask return.” Wisconsin v. 
J. C. Penney Co., 311 US 435, 444, 61 S Ct 246, 85 L Ed 
267 (1940). As the Tax Court explained, the United States 
Supreme Court has formulated the issue in terms of a two-
part test: First, there must be “some definite link, some 
minimum connection, between a state and the person, prop-
erty or transaction it seeks to tax,” and second, the “income 
attributed to the State for tax purposes must be rationally 
related to ‘values connected with the taxing State.’ 
” Quill 
Corp. v. North Dakota, 504 US 298, 306, 112 S Ct 1904, 119 
L Ed 2d 91 (1992) (quoting Miller Brothers Co. v. Maryland, 
347 US 340, 344-45, 74 S Ct 535, 98 L Ed 744 (1954), and 
Moorman Mfg. Co. v. Bair, 437 US 267, 273, 98 S Ct 2340, 
57 L Ed 2d 197 (1978)); see also Kaestner, __ US at __, 139 
S Ct at 2220 (stating the same test). Here, only the first 
 
requirement—a “minimum connection”—is at issue; the 
second requirement appears to be at issue only when a state 
taxes a portion of the income earned by an entity operating 
in interstate commerce.3 See Norfolk & W. Ry. Co. v. Missouri 
State Tax Comm’n, 390 US 317, 325, 88 S Ct 995, 19 L Ed 2d 
1201 (1968) (explaining that “[a]ny formula used” to allocate 
to the state a portion of the income of an interstate taxpayer 
“must bear a rational relationship, both on its face and in 
its application, to property values connected with the taxing 
State”).
	
The “minimum connection” requirement is assessed 
under the same flexible standard that is used to determine 
whether a state has sufficient minimum contacts with a 
person or entity to exercise jurisdiction over that person or 
entity. Quill, 504 US at 307-08. Whether the due process 
challenge is to a state’s attempt to exercise jurisdiction or to 
its attempt to impose a tax, the overriding principle is the 
	
3  The state contends that it “found no case where the Court has applied [the 
rationally related] standard to an estate tax,” and taxpayer does not disagree. 
The Tax Court nevertheless considered one of plaintiff’s arguments in the course 
of addressing the rationally related standard—plaintiff’s argument that a state 
resident’s interest in the income generated by trust assets does not support the 
state’s taxation of the entirety of those assets. The federal cases show, however, 
that arguments along those lines are relevant under the first, “minimum connec-
tion” inquiry. See, e.g., Kaestner, __ US at __, 139 S Ct at 2220 n 5, 2223 (consid-
ering the interest of North Carolina resident in trust after specifying that Court 
was not addressing the second requirement because the first was not satisfied).
Cite as 368 Or 430 (2021)	
439
same: “[O]nly those who derive ‘benefits and protection’ from 
associating with a state should have obligations to the State 
in question.” Kaestner, __ US at __, 139 S Ct at 2220 (citing 
International Shoe Co. v Washington, 326 US 310, 319, 66 S 
Ct 1904, 90 L Ed 95 (1945)). See also J. C. Penney Co., 311 
US at 444 (“A state is free to pursue its own fiscal policies, 
unembarrassed by the Constitution, if by the practical oper-
ation of a tax the state has exerted its power in relation to 
opportunities which it has given, to protection which it has 
afforded, to benefits which it has conferred by the fact of 
being an orderly, civilized society”).
	
Under that rule, a state unquestionably may tax 
interests in tangible property that is located within its bor-
ders. Curry, 307 US at 364. But a state also may tax inter-
ests in intangible property, consistently with due process, 
if the taxpayer has in some sense enjoyed the “benefits 
and protections” that the state offers. With respect to such 
intangible property that exists outside of the taxing state, 
the benefits and protections that are relevant are those that 
the state offers to persons or entities within the state who 
own or have similarly substantial interests in the property. 
As the United States Supreme Court explained in Curry, 
rights to intangibles “are but relationships between persons, 
natural or corporate, which the law recognizes by attaching 
to them certain sanctions enforceable in courts.” 307 US at 
366. As a result, “[t]he power of government over them and 
the protection which it gives them cannot be exerted through 
control of a physical thing. They can be made effective only 
through control over and protection afforded to those per-
sons whose relationships are the origin of the rights.” Id. 
Thus, the Court concluded: “Obviously, as sources of actual 
or potential wealth—which is an appropriate measure of 
any tax imposed on ownership or its exercise—they cannot 
be dissociated from the persons from whose relationships 
they are derived.” Id.
	
In other words, whether a state has the necessary 
minimum connection to intangible property that is con-
nected to the state only through an in-state resident depends 
on the nature of the in-state resident’s interest in the prop-
erty. If the resident’s interest in the intangible property is 
sufficiently substantial, such that it is a source of actual or 
440	
Estate of Evans v. Dept. of Rev.
potential wealth to and cannot be dissociated from the res-
ident, then his or her enjoyment of the benefits and protec-
tions offered by the state—including simply the benefit of 
living in an “orderly, civilized society” for which the state is 
responsible, J.C. Penney Co., 311 US at 444—is a sufficient 
justification for the state to impose its tax on that property.
	
Kaestner, the case cited by the Tax Court, is a useful 
starting point for understanding the essential due process 
requirement in the context of trusts. At issue in Kaestner 
was a North Carolina tax on any trust income that “ 
‘is for 
the benefit of” a North Carolina resident.” __ US at __, 139 
S Ct at 2219. North Carolina attempted to impose that tax 
on income generated over a four-year period by a trust that 
was administered under New York law by a trustee who 
was a New York resident, on the ground that the trust’s sole 
named beneficiaries resided in North Carolina. Those ben-
eficiaries, however, had not received any distributions from 
the trust during the relevant tax years. Indeed, the benefi-
ciaries had had no right to distributions because, under the 
terms of the trust, the trustee had “absolute discretion” to 
distribute the trust income and assets to the beneficiaries 
when and in whatever amounts he might decide, and during 
the period in question, the trustee had chosen not to distrib-
ute any of the income that the trust had accumulated. Id. at 
__, 139 S Ct at 2218-19. Confronted with the beneficiaries’ 
due process challenge to North Carolina’s imposition of the 
tax, the Court reviewed its past cases dealing with state 
taxes on trust assets and income based on a beneficiary’s 
residency in the state and identified the operative rule:
“When a tax is premised on the in-state residence of a ben-
eficiary, the Constitution requires that the resident have 
some degree of possession, control or enjoyment of the trust 
property or a right to receive that property before the state 
can tax the asset. Otherwise, the state’s relationship to the 
object of its tax is too attenuated to create the minimum 
connection that the Constitution requires.”
Id. at __, 139 S Ct at 2222 (citations omitted). Applying that 
rule to the circumstances of the Kaestner trust, the Court 
concluded that the Due Process Clause precluded North 
Carolina from taxing the trust assets during the tax years 
at issue, emphasizing three facts: the in-state beneficiaries 
Cite as 368 Or 430 (2021)	
441
had not received any income from the trust during those tax 
years, they had no right to control the trust or distributions 
therefrom, and they could not count on necessarily receiving 
any amount from the trust, even in the future. Id. at __, 139 
S Ct at 2223.
	
Kaestner is only a starting point, however. Although 
it sets out a general rule requiring that an in-state trust 
beneficiary “have some degree of possession, control or enjoy-
ment of the trust property or a right to receive that property” 
before the state can tax that property, it does not explore 
what might qualify as “some degree.” The parties point to 
much earlier Supreme Court cases as sources of additional 
guidance regarding what it means for a resident of a state to 
have had “some degree of possession, control or enjoyment” 
of intangible trust assets such that, upon their death, those 
trust assets may be taxed as part of their estate. The parties 
focus their arguments on three estate tax cases, all decided 
within a two-year period some eighty years ago—Curry, 307 
US 357, Graves v. Elliot, 307 US 383, 59 S Ct 913, 83 L Ed 
1356 (1939), and Whitney, 309 US 530.
	
In the first case, Curry, a resident of Tennessee had 
created a trust, funded by stocks and other intangibles, 
designating herself as the income beneficiary for life and 
reserving to herself certain powers, including the powers 
to direct the sale of the trust property and to dispose of the 
trust property by will. An Alabama corporation was des-
ignated as the trustee, and the trust was administered in 
Alabama and under the laws of that state. 307 US at 360-
61. In her will, the trustor bequeathed the trust property 
to the trustee in trust for the benefit of her husband and 
children. Id. at 361.
	
Upon the trustor’s death, Alabama and Tennessee 
both sought to impose an estate tax on the trust property, 
and the trustor’s executors in Tennessee sought a declar-
atory judgment in the Tennessee courts as to the two 
states’ authority in that regard. Id. at 361-62. On appeal 
from a Tennessee Supreme Court decision holding that only 
Tennessee could impose its tax, the United States Supreme 
Court reversed, holding that both states could impose their 
transfer taxes consistently with due process. The Court 
442	
Estate of Evans v. Dept. of Rev.
reasoned that Alabama could do so by virtue of the fact that 
an Alabama trustee had legal ownership of the intangible 
property, the beneficial interest in which was transferred 
upon the trustor’s death, id. at 370, while Tennessee could 
do so because of the in-state residency of a decedent who, in 
life, had had a right to control the trust property, including 
by directing its disposition upon her death, id. at 370-71. 
With respect to the latter point, the Court explained:
“The decedent’s power to dispose of the intangibles was 
a potential source of wealth which was property in her 
hands from which she was under the highest obligation in 
common with her fellow citizens of Tennessee, to contrib-
ute to the support of the government whose protection she 
enjoyed. Exercise of that power, which was in her complete 
and exclusive control in Tennessee, was made a taxable 
event by the statutes of the state.”
Id. The Court noted, too, that “[f]or purposes of taxation, 
a general power of appointment * 
* 
* has hitherto been 
regarded by this Court as equivalent to ownership of the 
property subject to the power.” Id. at 371.
	
In Graves, the Court reinforced its holding in Curry 
and clarified that the significance of the power to dispose 
of intangible property was not limited to an exercise of that 
power but extended also to a relinquishment of such power 
at death, through a failure to exercise it in life. The trust 
at issue in Graves was created by a New York resident who, 
during her lifetime, had transferred certain intangible 
property to a bank in Colorado to be held in trust. 307 US at 
384-85. The trust agreement provided that the trustee was 
to pay the income from the trust to the decedent’s daugh-
ter for life and, thereafter, to the daughter’s children until 
they reached a certain age, at which point the children were 
to receive a proportionate share of the trust principal. The 
decedent had reserved to herself the right to remove the 
trustee, change the trust beneficiaries, or revoke the trust 
and revest title to the property in herself at any point during 
her lifetime. Id.
	
When the decedent died—without exercising any of 
those reserved rights—New York tax authorities included 
the intangible property held in the Colorado trust in its 
Cite as 368 Or 430 (2021)	
443
assessment of decedent’s New York estate, but the New 
York Court of Appeals held that inclusion of that property 
infringed due process. Id. at 385-86. The Supreme Court 
reversed, emphasizing as it had in Curry that “the power of 
disposition of property is the equivalent of ownership. It is 
a potential source of wealth and its exercise in the case of 
intangibles is the appropriate subject of taxation at the place 
of the domicile of the owner of the power.” Id. at 386. As a 
result, “[t]he relinquishment at death, in consequence of the 
non-exercise in life, of a power to revoke a trust created by a 
decedent is likewise an appropriate subject of taxation.” Id. 
Relying on its reasoning in Curry, the Court concluded:
“[W]e cannot say that the legal interest of decedent in the 
intangibles held in trust in Colorado was so dissociated 
from her person as to be beyond the taxing jurisdiction 
of the state of her domicile more than her other rights in 
intangibles. Her right to revoke the trust and to demand 
the transmission to her of the intangibles by the trustee 
and the delivery to her of their physical evidences was a 
potential source of wealth, having the attributes of prop-
erty. As in the case of any other intangibles which she pos-
sessed, control over her person and estate at the place of 
her domicile and her duty to contribute to the support of 
government there afford adequate constitutional bases for 
imposition of a tax measured by the value of the intangi-
bles transmitted or relinquished by her at death.”
Id. at 386-87.
	
The final case that we consider, Whitney, differs 
from Curry and Graves in that the due process question had 
nothing to do with where intangible property held in trust 
may be taxed constitutionally and therefore did not include 
any discussion that might clarify the due process “minimum 
connection” requirement. The trust at issue in Whitney was 
established and funded in New York by the will of Cornelius 
Vanderbilt. It provided for an annual income to Vanderbilt’s 
wife and also gave Mrs. Vanderbilt the power to dispose of 
the trust principal among the couple’s four children in her 
will, in such proportions as she might choose. The trust fur-
ther provided that, if Mrs. Vanderbilt did not exercise that 
“special power of appointment” in her will, then the trust 
property would be divided equally among the four children 
444	
Estate of Evans v. Dept. of Rev.
upon her death. 309 US at 534-35. Mrs.  Vanderbilt did 
exercise the power of appointment in her will and, upon 
her death, the taxing authorities of New York (where the 
trust was administered and Mrs.  Vanderbilt had at all 
times resided) included the value of the trust principal in 
Mrs.  Vanderbilt’s gross estate for purposes of calculating 
the state’s estate tax. Mrs.  Vanderbilt’s beneficiaries and 
executors challenged New York’s inclusion of the trust prin-
cipal in her estate, arguing that doing so violated the Due 
Process Clause, given that Mrs. Vanderbilt had not been the 
“beneficial owner” of the trust corpus—by which the chal-
lengers meant that she could not use the corpus of the trust 
herself, could not appoint it to her own estate, and could not 
direct it to her creditors. Id. at 535-38.
	
The Supreme Court rejected the due process chal-
lenge. The Court explained that, to the extent that New 
York’s estate tax statute was aimed at diverting to the com-
munity a portion of the total wealth released by a death, the 
state was
“not confined to that kind of wealth which was, in collo-
quial language, ‘owned’ by a decedent before death, nor 
even to that over which he had an unrestricted power of 
testamentary disposition.”
Id. at 538. Instead,
“[i]t is enough that one person acquires economic inter-
ests in property through the death of another person, even 
though such acquisition is in part the automatic conse-
quence of death or related to the decedent merely because 
of his power to designate to whom and in what proportions 
among a restricted class the benefits shall fall.”
Id. at 538-39. After pointing to various other circumstances 
in which property not “beneficially owned” by a decedent 
may nevertheless be included in his or her estate, the Court 
made an even more expansive statement:
“A person may by his death bring into being greater inter-
ests in property than he himself has ever enjoyed, and the 
state may turn advantages thus realized into a source of 
revenue[.] * 
* 
* [I]f death may be made the occasion for tax-
ing property in which the decedent had no ‘beneficial inter-
est,’ then the measurement of that tax by the decedent’s total 
Cite as 368 Or 430 (2021)	
445
wealth-disposing power is merely an exercise of legislative 
discretion in determining what the state shall take in return 
for allowing the transfer.”
Id. at 539-40 (emphasis added).
	
The parties here draw radically different conclu-
sions from the foregoing cases about the correct application, 
in the estate tax context, of the Kaestner rule. To reiterate, 
Kaestner holds that, to the extent that a state relies on the 
in-state residency of a constituent4 of an out-of-state trust 
to tax the trust property, the demands of due process are 
satisfied only if the state-resident constituent has “some 
degree of possession, control or enjoyment of the trust prop-
erty or a right to receive that property.” __ US at __, 139 S 
Ct at 2222. Plaintiff contends that the cases all support its 
contention that a decedent who was the income beneficiary 
of an out-of-state trust must have had some actual control 
over the assets of the trust before the decedent’s home state 
may impose its estate tax on those assets. More specifically, 
plaintiff adds, the cases show that “for due process purposes, 
the minimum, requisite control over the principal of a trust 
is the grant of at least some ability to decide or control how 
the trust principal will be invested, managed, or distrib-
uted.” Plaintiff then asserts that, because Evans had had no 
ability to control how the Gillam Trust assets were invested, 
managed, or even distributed upon her death, Oregon could 
not rely on her in-state residency at the time of her death to 
establish the required minimum connection to those assets.
	
The department contends that Curry, Graves, and 
Whitney merely offer examples of how the due process 
requirement that the decedent have “some degree of posses-
sion, control or enjoyment of the trust property or a right 
to receive that property,” Kaestner, __ US at __, 139 S Ct 
at 2222, may be satisfied and do not support the rule that 
plaintiff purports to draw from them. According to the 
department, those cases establish that a state may include 
the assets of an out-of-state trust in a decedent’s estate when 
the decedent had either complete (in Curry and Graves) or 
more limited (Whitney) control respecting the disposition of 
	
4  Kaestner uses the inclusive term “trust constituent” to refer to a trust’s 
“settlor, trustee, or beneficiary.” __ US at __, 139 S Ct at 2221.
446	
Estate of Evans v. Dept. of Rev.
the trust assets, but they do not establish that due process 
requires such control or requires any other specific feature 
in an in-state decedent’s relationship with an out-of-state 
trust before the state of residence may impose its estate tax 
on the trust assets. In particular, the department contends 
that those cases do not speak to the circumstance here, in 
which decedent had a large degree of enjoyment of the trust 
property by virtue of her exclusive rights under the terms of 
the trust.	
	
We agree with the department that the cited cases 
do not establish that a state may impose an estate tax on 
the assets of an out-of-state trust only if the deceased ben-
eficiary had the ability to control how the assets of that 
out-of-state trust were managed, invested, or distributed. 
Instead, based on the rule announced in Kaestner, __ US at 
__, 139 S Ct at 2222, we conclude that the demands of due 
process also could be satisfied by a showing that a resident 
decedent had some degree of possession or enjoyment of, or 
right to receive, the trust property. See Kaestner, __ US at 
__, 139 S Ct at 2223-24 (demonstrating that court looks at 
whether beneficiaries had some enjoyment or future right to 
receive trust property, not just at whether they had right to 
control trust property, when considering “minimum connec-
tion” question).
APPLICATION
	
Applying that standard to this case, we conclude 
that Evans had sufficient “enjoyment” of the trust princi-
pal (in addition to the enjoyment of the income generated 
thereby) to satisfy Kaestner’s requirement of “some degree 
of possession, control, or enjoyment” of the trust assets 
and thus to permit Oregon to include those trust assets in 
Evans’s taxable estate.5 While, under her husband’s modified 
will, Evans could not claim a right to the whole of the trust 
principal or any particular portion thereof, she had a poten-
tial right to receive distributions of principal, to the extent 
that trust income was insufficient to satisfy her needs. No 
	
5  “Enjoyment,” in this context, appears to derive its meaning from the 
intransitive form of the verb “enjoy,” i.e., “to have for ones use, benefit, or lot.” 
Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/enjoy 
(accessed July 21, 2021).
Cite as 368 Or 430 (2021)	
447
other person could receive any part of the principal during 
Evans’s lifetime. And while the remainder beneficiaries had 
a right to whatever was left of the principal after Evans’s 
death, they could not prevent her from receiving distribu-
tions of principal that would reduce or even eliminate their 
own ultimate shares in the remainder.
	
Even under the settlement in which Evans ceded 
her rights with respect to the trust principal under her hus-
band’s will and Montana law, she received a substantial one-
time payment that consisted of part of the principal. And she 
retained a potential right to distributions from principal, to 
the extent that the trust principal failed to generate income 
sufficient to cover the agreed-upon fixed monthly distribu-
tion. In all of those ways, Evans could and did access the 
trust principal for her own use and benefit in a way that 
no other person could during her lifetime. We conclude that 
Evans thereby had a substantial measure of enjoyment of 
the trust principal. And therefore, under the rule set out in 
Kaestner, Oregon could rely on Evans’s status as an Oregon 
resident to impose its taxes on that trust principal without 
violating the Due Process Clause.6
	
We caution, however, that our focus on Evans’s 
enjoyment of the trust assets should not be taken as a 
conclusion that the circumstances here could not be con-
sidered sufficient control of the trust assets. Plaintiff has 
insisted that Evans never had control of the trust assets in 
the required sense (“some ability to decide or control how 
	
6  Evans also had at least a potential “right to receive” all the trust assets 
within the meaning of the Kaestner rule. A term of her husband’s will that was 
unaffected by the settlement provided: 
“If any trust created hereunder shall violate any applicable rule against per-
petuities, accumulations, or any similar rule or law, my trustee is hereby 
directed to terminate such trust on the date limited by such rule or law, and 
thereupon, the property held in such trust shall be distributed to the persons 
then entitled to share the income therefrom in the proportions to which they 
are entitled to share the income therefrom, notwithstanding any provision of 
this will to the contrary.”
Under that term of the will, Evans would have been entitled to receive the trust 
assets if the trustee had been required to dissolve it for a violation of law—and, 
indeed, would be the only person so entitled. The existence of that contingent 
right adds to our conclusion that, overall, Evans had the requisite “degree of 
possession, control or enjoyment of the trust property or [ 
] right to receive that 
property.” Kaestner, __ US at __, 139 S Ct at 2222.
448	
Estate of Evans v. Dept. of Rev.
the trust principal will be invested, managed, or distrib-
uted”) because the management and distribution of the 
assets was completely in the hands of the trustee. But plain-
tiff’s description of Evans’s rights—or lack thereof—is not 
entirely accurate. The modified will that controlled the trust 
clearly contemplated that Evans would receive distributions 
from the trust assets as “necessary for [her] health, educa-
tion, maintenance or support in [her] accustomed manner 
of living.” The fact that it directed that those distributions 
be in “such amounts from the principal as the trustee deter-
mines to be necessary” for that purpose did not foreclose 
the possibility that Evans could judicially compel distri-
butions of principal to herself, if her needs were not being 
met. Furthermore, under Montana law, Evans could force 
the trustee to take certain actions with respect to the trust 
property if the amount of trust income that he distributed 
to her was “insufficient to provide [her] with the beneficial 
enjoyment required to obtain the marital deduction.” MCA 
§ 72-34-445. Evans did ultimately agree to give up those 
potential claims in exchange for a lump sum payment from 
principal and a right to a monthly distribution set at a spec-
ified amount. But we leave for another day the question of 
whether such a settlement rendered irrelevant any potential 
control of the trust principal that beneficiary might have 
had for purposes of the Kaestner rule or whether the abil-
ity to enter into a settlement regarding distribution of the 
trust assets was itself a demonstration of control. We need 
not resolve those questions because we conclude that Evans 
otherwise satisfied Kaestner’s requirement that she have 
sufficient “possession, control, or enjoyment” of the trust 
assets to permit Oregon to include the assets in Evans’s tax-
able estate.
	
Plaintiff, nevertheless, insists that satisfying the 
Kaestner test is not enough, that due process requires more 
in this case. Seemingly appealing to a more generic under-
standing of what the Due Process Clause requires, plaintiff 
contends that it is confiscatory and unfair to allow Oregon 
to tax the assets of a Montana trust based solely on the facts 
that the trust assets were designated as QTIP for purposes 
of federal estate taxes and that the trust’s income beneficiary 
happened to be living in Oregon when she died. Plaintiff’s 
Cite as 368 Or 430 (2021)	
449
points in that regard appear to be twofold. First, plaintiff 
suggests that it is unfair for Oregon to rely on the federal 
tax QTIP election of Gillam’s executor as a statutory basis 
for including the trust assets in Evans’s Oregon estate, when 
the quid pro quo rationale that justifies the QTIP mecha-
nism—inclusion of the value of trust property in the estate 
of a surviving spouse in exchange for the earlier deduction 
of the value of that property from the estate of the original 
decedent—is not relevant to Evans’s Oregon estate (because 
there had been no earlier deduction from Gillam’s estate 
either in Oregon or Montana). And second, plaintiff suggests 
that including the trust property in Evans’s Oregon estate 
would be unexpected and arbitrary. According to plaintiff, 
neither Gillam, in creating the trust with the federal mar-
ital deduction in mind, nor his executor, in electing to des-
ignate the trust property as QTIP, could have foreseen that 
the trust assets would thereby become subject to taxation 
in Oregon, based on the mere happenstance that Evans, the 
income beneficiary, moved to and died here.
	
Plaintiff’s first argument misapprehends the 
kind of fairness that the Due Process Clause requires. As 
explained above, a QTIP election permits a married couple 
to defer certain taxes that otherwise would be imposed on 
the estate of the first to die until the death of the survivor. 
It does so by allowing a deduction of QTIP-designated trust 
property from the original decedent’s estate in exchange for 
the subsequent inclusion of the same trust property in the 
estate of the survivor. In the many states that, like Oregon, 
tie the value of a decedent’s estate for state tax purposes to 
the value of his or her federal estate, a federal QTIP elec-
tion generally will result in application of the same bargain 
or exchange to the state taxes that pertain to the affected 
individuals: Property in a QTIP trust will not be subject 
to either federal or state estate taxes when the first spouse 
dies, but will later be subject to both the federal and state 
taxation as part of the surviving spouse’s estate.
	
We recognize that differences in state tax laws 
mean that a federal QTIP election will not always produce a 
corresponding benefit with respect to the original decedent’s 
state-level estate—as here because Montana does not tax 
450	
Estate of Evans v. Dept. of Rev.
estates—yet another state in which the surviving spouse 
dies includes the trust property in that surviving spouse’s 
taxable estate. That difference in outcome is simply the 
result of permissible differences in the tax laws of the states 
that are involved, not a violation of the Due Process Clause.
	
Plaintiff also suggests that Oregon’s inclusion of the 
trust assets in Evans’s Oregon estate is unfair in the sense 
of being caused by an unforeseen and arbitrary event—
plaintiff’s relocation to and death in Oregon, a state that 
has an estate tax and that bases that estate tax on the value 
of the decedent’s federal taxable estate. But, as the depart-
ment points out, the possibility of incurring additional tax 
liability depending on where Evans chose to reside was 
inherent in the election to designate the assets of the Gillam 
Trust as QTIP and a risk that Gillam’s executor knowingly 
took when he made that election. Evidence of that fact is in 
Article Fifth of Gillam’s modified will, which, in conjunc-
tion with authorizing the QTIP election, directs that, upon 
Evans’s death, the trustee of the Gillam Trust shall pay 
over to the legal representative of her estate such amounts 
as the trustee shall determine for the payment of “federal 
and state death taxes * 
* 
* imposed by any jurisdiction by 
reason of [Evans’s] death and with respect to any property 
included in this trust.” (Emphasis added.) Moreover, Evans’s 
move to Oregon was quite the opposite of unforeseen: She 
moved to Oregon a month before Gillam died, and many 
months before Gillam’s executor even began the process of 
modifying Gillam’s will to allow the QTIP election.
	
We are persuaded, in fact, that Oregon’s inclusion 
of the assets of the Gillam Trust in Evans’s Oregon estate 
should be considered fair precisely because of the choice by 
Gillam’s executor to designate those assets as QTIP. Our 
conclusion that Evans’s interests in the assets of the trust 
were such that Oregon’s imposition of its estate tax on those 
assets does not offend due process draws on the specific con-
text of ORS 118.005(7), which bases Oregon’s estate tax on 
the value of a decedent’s federal estate; a QTIP election that 
resulted in a reduction to Gillam’s federal estate in exchange 
for a subsequent increase in Evans’s federal estate; and an 
agreement that the trust—not Evans’s heirs—would be 
Cite as 368 Or 430 (2021)	
451
liable for any resulting increase in Evans’s federal and state 
estate taxes.
	
We have determined that Evans had sufficient 
enjoyment of the assets of the Gillam Trust during her life-
time that those assets cannot be dissociated from her, and 
that therefore, through Evans, Oregon had the minimum 
connection to the trust assets that due process requires 
before Oregon may tax the assets. And we have rejected 
plaintiff’s additional arguments that, even if Oregon had 
the required minimum connection to the assets, its taxa-
tion of the assets is nonetheless unfair—and thus violates 
the Due Process Clause. It follows that the Tax Court did 
not err when it determined that Oregon’s inclusion of the 
trust assets in Evans’s Oregon estate was consistent with 
due process.
	
The judgment of the Tax Court is affirmed.