Opinion ID: 1953195
Heading Depth: 1
Heading Rank: 4

Heading: Inter Vivos Transfers []

Text: Section 221. Consideration; Quantum of Taxable Transfer.  (a) Consideration. All transfers of property, specified in sections 222-226, which are made during his lifetime by a resident or a nonresident, to the extent that they are made without valuable and adequate consideration in money or money's worth at the time of transfer, are subject to tax under this act. . . . Section 226. Revocable and Tentative Trusts.  A transfer conforming to section 221(a), and under which the transferor has, at his death, either in himself alone, or in conjunction with any person not having an adverse interest, a power to alter, amend or revoke the interest of the beneficiary, is subject to tax under this act. Similarly, the relinquishment of such a power in contemplation of death, within the meaning of section 222, is a transfer subject to tax. The question, therefore, is whether decedent had at her death a power to alter, amend or revoke the interests of her sons in the savings account trusts which she created. It is a general and basic rule of trusts that when property is placed in the name of the donor in trust for a named beneficiary, a trust is created which is prima facie irrevocable, unless a power of revocation is expressly or impliedly reserved. However, there is firmly embedded in Pennsylvania a tentative trust doctrine. [] Brose Estate, 416 Pa. 386, 206 A. 2d 301. The tenative trust doctrine or exception to the general rule of trusts provides that, with respect to a deposit in a savings account by one person of his own money, in his own name as trustee for another, a mere tentative trust, revocable at will, is deemed to have been created. Nevertheless, extrinsic evidence, if clear and convincing, is admissible to prove that the depositor's intent was to create an irrevocable trust. Brose Estate, 416 Pa., supra. The appellant-executor advances several facts and circumstances which he contends evidence the decedent's intent to create irrevocable trusts: (1) when opening the accounts, decedent refused to sign the revocable trust clause on the reverse side of the savings and loan associations' agreements (or signature cards) of deposit, saying, I will not sign anything unless Mr. Bell reads it first; (2) there were no principal withdrawals from any of the five savings accounts during decedent's lifetime; (3) the decedent did not include in her Federal Income Tax return the interest on these savings accounts; and (4) at least two of the accounts were established in the presence of Holland R. Sayre, a beneficiary. The Commonwealth, on the other hand, contends that the issue is governed and controlled entirely by a stipulation of counsel, which appears in the record, that the decedent had the power to alter, amend or revoke the trust accounts during her lifetime. As we shall see, the stipulation does not so state. The stipulation merely states that if the savings and loan association officers were called, each would testify that the decedent had the power to alter, amend or revoke. Such testimony, without more, may mean that that is the policy of the bank or the officers' interpretation or understanding of the legal effect of such a deposit, and their conclusion is not binding on the Courts. Moreover, decedent's failure to include the interest from the savings accounts in her Federal Income Tax return [] could be the result of her misunderstanding of the Federal tax laws. To summarize: we have carefully considered appellant-executor's contentions, as well as the entire record, and conclude that the factors asserted in support of irrevocability are far from clear and convincing. Decree affirmed; each party to pay own costs.