Document: 71 L.Ed.2d 170 102 S.Ct. 1082 455 U.S. 305 George F. JEWETT, Jr., et ux., Petitionersv.COMMISSIONER OF INTERNAL REVENUE. No. 80-1614. Argued Dec. 1, 1981. Decided Feb. 23, 1982. Syllabus Held: The "transfer" referred to in the Treasury Regulation excepting from federal gift tax a refusal accept ownership of an interest property transferred by will if such is effective under local law and made "within reasonable time after knowledge existence transfer," occurs, as indicated both text history Regulation, when created not at later either vests or becomes possessory. Hence, this case where disclaimers contingent testamentary trust, though law, were until 33 years, thus time," was created, subject §§ 2501(a)(1) 2511(a) Internal Revenue Code, indirect gifts successor interest. Pp. 309-319. 638 F.2d 93, affirmed. James D. St. Clair, Wellesley Hills, Mass., for petitioners. Stuart A. Smith, Washington, C., respondent. Justice STEVENS delivered opinion Court. 1 A trust beneficiary's may constitute liability. 26 U.S.C. 2501, 2511. Under § 25.2511-1(c), however, it transfer." petitioner husband (hereafter petitioner) executed years that but while still contingent. narrow question presented whether occurs Government contends, possessory, argued petitioner. 2 Petitioner's grandmother, Margaret Weyerhaeuser Jewett, died 1939 leaving bulk her substantial estate trust. Her will, Massachusetts, provided income should be paid petitioner's grandfather during his life, thereafter parents. Upon death surviving parent, principal divided "into equal shares trusts so there shall one share each child my said son [petitioner's father] then living issue representing dead." App. 9. mother sole life tenant. Thus, plan, survived mother, he would receive corpus trust; predeceased distributed issue. Since parents had two children, amounted one-half principal. 3 In 1972, 45 old, disclaimers. recognized "an fifty percent (50%) . survives" mother. Id., 15. first disclaimer, renounced right 95% "of aforesaid remainder estate," ibid. ; second remaining 5%. 1972 value exceeded $8 million. 4 Petitioner wife filed returns third fourth quarters which they advised Commissioner disclaimers, did treat them taxable gifts.1 assessed deficiency approximately $750,000. He concluded transfers within meaning 2501(a)(1)2 2511(a)3 excepted Treas.Reg. 25.2511-1(c)4 because knowledge" grandmother's transfer him estate. action Tax Court seeking redetermination deficiency. 5 Appeals, nothing more than "reasonable time" tax-free disclaimer could begin run became vested possessory upon last tenant.5 Although comparable argument been accepted Appeals Eighth Circuit Keinath v. Commissioner, 480 57 (1973),6 rejected Court7 Ninth Circuit8 case. We granted certiorari resolve conflict. 452 904, 101 3029, 69 404. 6 relies heavily on plain language early decisions influenced its draftsmen. Before analyzing history, appropriate review statutory provisions regulation interprets. 7 * Section Code imposes "on gift." provides apply "whether direct indirect, real personal, tangible intangible." As Senate9 House10 Reports explain: 8 "The terms 'property,' 'transfer,' 'gift,' 'indirectly' are used broadest most comprehensive sense; term 'property' reaching every species protected having exchangeable value." 9 Smith Shaughnessy, 318 176, 180, 63 545, 547, 87 L.Ed. 690, noted "[t]he statute, 'property intangible,' broad enough include property, however conceptual contingent." 10 Our expansive reading unquestionably encompasses transfer, effected means future trust.11 Congress enacted "corollary" "supplement" tax.12 Estate Sanford 308 39, 44, 60 51, 56, 84 20, explained "[a]n important, main, purpose prevent compensate avoidance taxes taxing inter vivos which, gifts, original converted form laid death." practical effect reduce expected size confer gratuitous benefit natural objects bounty, treatment fully consistent with basic scheme. II 11 controlling decedent does conditions met. First, must governing administration decedent's Second, 12 There no dispute requirement has satisfied; Massachusetts law. controversy arises requirement; specifically, over word "transfer," read refer creation vesting distribution assets Both positions find support Regulation. 13 To layman normally describe change existing rather new Moreover, reference "ownership property" suggests transferee acquire once owned decedent; grandmother never interests she own (or their equivalent) remaindermen become character. implies relevant yet occurred 14 Other language, indicates testator's death. any passage without consideration have consequences. See 2511, quoted nn. 2, 3, supra.13 describes "is will" descent intestate property), subsequent event property. "from decedent," executor administrator. lack remainders, focus through laws distribution, undermine suggestion other also requires "knowledge transfer"; since person whom actually seldom, ever, seems likely provision drafted protect persons who 15 On balance, we believe supports Commissioner's interpretation. Because entirely clear, examine briefly Regulation's history. III 16 25.2511-1(c) changed promulgated November 15, 1958. somewhat different draft proposed January 1957. That required renunciation interest," "transfer."14 "interest" encompass even arguably not. initial adopted change, certainly tax. contends drafting intended avoid consequence. 17 An assessment examination reason language. explanation rendered 1958 accomplish quite suggested 18 Memorandum Secretary submitted October 1958, capture "the proper distinction" between court attempted codify.15 these cases fee before completed. earlier case, Brown Routzahn, 914 (CA6 1933), cert. denied, 290 641, 54 60, 78 557, refused bequest wife's will. Ohio preceded acquired held interest; rather, deemed exercise refuse Accordingly, contemplation purposes determining husband's Hardenbergh 198 (CA8 1952), 344 836, 73 45, 97 650, wife, daughter, prior marriage. effectuate intent equalize wealth three, daughter relinquished rights shares. Minnesota "title taxpayers operation neither power prevent." F.2d, 66. denied renounce interest, taxpayers' constituted 19 Memorandum, sought preserve distinction cases. Originally, tracked only title "vested" state consideration, cases"; indeed, taxpayer's renunciation.16 incorporate distinction, "vesting" estate" give "refuse decedent." Having eliminated "vested interest" part correspondingly interest." 20 exclude remainders. Neither nor concerned interests. position unrelated presented, buttresses position. 21 demonstrates draftsmen merely codify rules Routzahn those controlled "right" "timeliness" renunciation. accurately interprets cases, interpretation render half superfluous. explicitly requirements: (1) matter law; (2) time. If timeliness governed solely redundant. While possible require timely effective, absolve taxpayer separate imposed Otherwise, complete single law.17 IV 22 arguments answered quickly. Reform Act 1976, established specific standards constitutes gift; date Act.18 argues legislative decision retroactively evidence rule previously effective. It expressed case; unambiguous future.19 23 unfair "retroactively" previously; asserts that, adopted, already too late—according view—to disclaim interest.20 lacks merit. based assumption consequences "taken away" right. Indeed, argue taxation inconsistent imposing tax, long created. well advance see "retroactivity" problem. 24 Finally, analogizing special appointment, generally considered transfer. 2514. notes response, disclaimant's control closely resembles general Ibid. Unlike holder power—but like power—a disclaimant decide retain himself. characteristic exercised makes scope provisions. V 25 entitled respect. This canon construction, applies Portland Cement Co. Utah, 450 156, 169, 1037, 1045, 67 140, forceful applied irrevocably Even accepting clock reached age majority, years. explained: 27 possessed, determine ultimately benefits 50-percent waited act respect beneficiary 70 himself and, appears, man means. execution elected let pass according alternative will—to bounty. This, hold, disposition section 2501." T.C. 430, 438 (1978) (footnote omitted). 28 agree. proper, statute 29 judgment 30 ordered. 31 BLACKMUN, REHNQUIST O'CONNOR join, dissenting. 32 I do easy clear behalf Court's lead believe. described close, conclude petitioners much better argument, reverse Appeals. testate 14, 1939. At resident Massachusetts. She left duly admitted probate Commonwealth. 34 By husband, R. lifetime, son, Mary, respective lives. survivor three beneficiaries, children Jewett deceased representation. 35 born April 10, 1927; old died. testatrix' James, George, 1972. Mary living; March 7, 1901. 36 August 30, petitioner1 instrument disclaiming renouncing major portion December year, undisputed valid, timely, applicable 37 Lucille M. calendar ended September 31, respectively. Those notified respondent acknowledge purposes.2 38 audit, determined "made CFR (1981), 1954, amended 2511(a). Deficiencies $750,000 determined. 39 Petitioners deficiencies United States court, reviewed decision, ruled favor Commissioner. 430 (1978). doing, followed ruling 58 352 (1972), unreviewed reversed, (1973), unanimous panel five before. present Circuit, vote, affirmed 93 (1980). conflict, judgments Courts here. 40 observes, ante, 311, acknowledges "implies 'transfer' trust." Court, opts opposing am persuaded otherwise. 41 sure, certain factors lend colorable position: (a) testatrix died, attained 1948, (b) Sections sweeping reach "transfer gift," otherwise, indirect. (c) And petitioners' mean, matter, stand aside period thus, sense, make planning actual enjoyment nearer hand desirability need evaluated many 42 side controversy, support. deal abstractions. 2501(a)(1). With development trusts—or, legally "interests" various kinds, anticipatory, can trustor. or, suggest here, 308, n. 5, "a divestiture," realize anything way corpus. contingencies depends ripen. particular, die 43 These possibilities, accompanied monetary impact led courts bodies recognize develop common-law enact preventive issue, recognizes refuse, free acceptance search vain, mention of, for, reasonable-time requirement. One might say, therefore, wisdom acted grace relieve, specified, what difficult potentially financially disastrous situations. 44 Be may, regard Jr. (the necessary predicate determination), testatrix. largess flows. Petitioner, course, line designated stepped acts by. considerations appeal me: 1. Accepting requirement, me measured, 1939, preceding beneficiary. beneficiary, alive. realized predeceases contingency important sense disclaimer. 46 2. fundamentally voluntary ab initio. Bel States, 683, 693 (CA5 1971), 406 919, 92 1770, 118 (1972); Black's Law Dictionary 417 (5th ed. 1979). founded property-law concepts recipient, forced against transferor chooses recipients property; selection, selection purport 47 3. Until decided authority supra. For reasons best known him, seek stood unmolested appellate seven expressly reaffirmed sitting en banc Cottrell 628 1127 (1980), just few weeks decision.3 interim, goes, advisers properly assumed valid made. Judge Harris, dissenting below, observed "it particularly matters precedent followed." 96. went say impression, "might join majority" "[n]umerous practitioners undoubtedly relied [the ] advising involved instant justifiably so." agree stability desirable. Except pronounced appeared achieved level Keinath. 48 4. Circuit's analysis legal me, sound. stressed "at trust," 59, eight widow-life remainderman result thereof passed children. defined requirements "are codification common principles doctrine disclaimers." 61. central factor "had really beneficial succeeded outliving beneficiary." 64. prevailing subjected divestiture distinguished Fuller 147 (1961), relied, factual grounds mentioned below. 49 Cottrell, banc, adhered analysis. felt "indistinguishable material " 1128. unequivocal, disclaimed. Keinath, began testator, untimely, critical "was days, months, thereafter." 1129. improper allowing wait bequest. 50 What analysis, held, facts us, persuasive particular disagreed reasoning conclusory statement, disclaimed him," took place Mrs. received 51 5. notes, 316, Pub.L. 94-455, 2009(b)(1), 2518, now uniform independent added specifically prospective only, is, creating 1976. 2009(e)(2), 90 Stat. 1896. application 52 declares, 317: "Congress case," future. conclusion all me. aware decision. H.R.Rep.No.94-1380, p. 66, n.4 (1976). House Committee Ways Means observed: 53 amendments 1977, relating including made, continue 1976." 67-68, U.S.Code Cong. & Admin.News 3421-22. acknowledgment represented instruments year. cannot flat statement opinion" 55 6. persisted contrary rulings. rulings, feel, rest insecure base. flowed, Fuller, five-eighths share. vital fact distinguishes enjoyed whatsoever. it. 56 next (1972). judge precedent. acknowledged Fuller's receipt "for years," conceded admittedly different," nevertheless "this immaterial." T.C., 358. "as resting pertinent case.4 to, upon, reversed Circuit. "We think our correct controls case." 435. Halbach 141 (1978), 72 489 (1979). former centering 2035 (disclaimer death). latter, concerning sister decedent, related recognizing appealable avoided distinguishing found unacceptable majority reversed. 59 Such saga build another, origin base Fuller. view, clearly distinguishable frail reed lean." 7. embrace distinct element unfairness. stresses repeatedly number elapsed same others But ripen into know ever enjoy concern compatible wording speaks unfairness Cottrell. 1131. 61 reasons, therefore respectfully dissent. consent extent allowed Pet. Cert. A-20. "A computed 2502, hereby quarter individual nonresident." "Subject limitations contained chapter, 2501 intangible; nonresident citizen situated States." indirectly transactions whereby gratuitously conferred regardless devise employed, further 25.2512-8. Where gives heir, next-of-kin completely unqualifiedly (whether making unequivocable [sic acceptance. permit refusal, another next-of-kin. purported relate determination unqualified depend circumstances taking account recognition effectiveness absence contrary, fails learning presumed illustration, Blackacre devised (which lapsed legacies devises go B, residuary beneficiary), A, A's B. However, Greenacre C D heirs, heir cannot, accept, becoming owner (by whatever known) up acquires whole D." (1981). assume characterized remainder. divestiture, substance Cf. Helvering Hallock, 309 106, 444, 604. rule" emphasized obtain S.Rep.No.665, 72d Cong., 1st Sess., (1932). H.R.Rep.No.708, affected indefeasibly vested. case: not, Rather, depended actuarial reflecting contingencies." 435, n.3. designed "to impose measurably approaches payable donor's given reached, tax." supra, 28; 40. contend irrevocable made; Jewett's short, use indicative meaning. least defining "in sense." 309, nn.9, 10. surprising choose utilized 1957, provided, part: next-of-kin, devisee immediately gift, bequest, inheritance, vest, complete, Fed.Reg. (1957). published Notes, July 27, 1981, 204. part, explains: "In (1933) 914, 641 [54 557], (1952) 63, 836 [73 650], stated vest death, giving gift. Protests received. After reviewing protests, reconsidered turns State decedent. revised paragraph 25.2511-1 reflect position." [taxpayer] possession 1912 trustees 1920. donee, coexecutor. Nevertheless, taken one-third estopped claiming neither. conceded, too, think, estate." 916. response old. Department thought delay purposes. effect, 8-year personal planning. "While willing nonpossessory considerable time, parties harmed, crucial scheme potential recipient needs directly generation." 437. 1893, 2009(b), 2518(b). noting 1973), "reasonable" Report states "believe[d] definitive achieve treatment. addition, [Congress] believe[d] standard made." pp. 66-67 (1976), 2897, 3420-21. Nothing expresses Nor mere enactment clarify affecting past. Knetsch 364 361, 367-370, 81 132, 135-137, 128. adoption some later. convenience, herein "petitioner" singular, refers alone. Petitioners, 2513 2513, equally both. judges dissented contrast situation "extensive" "ultimate" appointment. They modify approach "where essentially events cause agreed, "general Keinath," "less remainder." 1132-1133. note asked us overrule inclined motion." See, Rolin 68 927 (1977), aff'd, 588 368 (CA2 1978).

Category: 11