Court Opinion

ID: 3510074
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:20:43.426078+00
Date Added: 2024-06-11T13:04:51.424700
License: Public Domain

The federal estate tax statute, U.S.C. Supp. V, Title 26, § 1094, 26 USCA, § 1094, imposes the tax on transfers made "in contemplation of or intended to take effect in possession or enjoyment at or after his [the donor's] death." Our own transfer tax statute, G. S. 1923 (1 Mason, 1927) § 2292(3), imposes the tax on transfers made "in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death." There is no difference between the two statutes as to the subject upon which the tax is laid. The fact that one tax is called an estate tax and charged and collected out of the net estate and the other is called a transfer tax and apportioned and collected out of the respective shares of the beneficiaries does not change the meaning of the language clearly specifying the subject upon which the tax is laid.
As said in Tyler v. U.S. 281 U.S. 497, 503, 50 S. Ct. 356,359, 74 L. ed. 991, 998, 69 A.L.R. 758:
"The question * * * is not whether there has been, in the strict sense of that word, a 'transfer' of the property by the death of the decedent, or a receipt of it by right of succession, but whether the death has brought into being or ripened for the survivor, property rights of such character as to make appropriate the imposition of a tax upon that result (which congress may call a transfer tax, a death duty, or anything else it sees fit), to be measured, in whole or in part, by the value of such rights."
In our present case the transfers in question could be taxed only in case they were made in contemplation of death or intended to take effect in possession or enjoyment at or after the death of the donor. The opinion holds that the transfers were not made in contemplation of death. There remains only the question of whether *Page 70 
the transfers were intended to take effect in possession or enjoyment at or after the death of the donor. The corpus of the securities was transferred absolutely and irrevocably to the trustee. The donor reserved to herself the income therefrom during her life. At her death the income from a specified part of the securities was to go to one of her daughters for life and remainder then to another daughter. To the other daughter was also to go the other specified part of the securities on the death of the donor.
The federal supreme court has passed upon the right to tax such transfers and has held that where the property is transferred absolutely and irrevocably to a trustee, to be by such trustee delivered to named beneficiaries at or after the death of the donor, with income reserved to the donor or other person or persons for life, and the transfer is not made in contemplation of death, it is not taxable as one intended to take effect in possession or enjoyment at or after the death of the donor. That court holds that at the death of the donor, who had reserved to herself the income from securities so transferred to a trustee, no interest in the property held under the trust instrument passed from the donor to the living beneficiaries; that title thereto had been definitely fixed by the trust instrument; that the interest which the donor had therein immediately prior to her death was obliterated by that event. Reinecke v. Northern Tr. Co. 278 U.S. 339,49 S. Ct. 123, 73 L. ed. 410, 66 A.L.R. 397; May v. Heiner,281 U.S. 238, 50 S. Ct. 286, 74 L. ed. 826, 67 A L. R. 1244; Coolidge v. Long, 282 U.S. 582, 51 S. Ct. 306, 75 L. ed. 562.
These cases seem to me to control our present case. I have found nothing in the federal supreme court cases in conflict with these holdings. The later case of Heiner v. Donnan,285 U.S. 312, 52 S. Ct. 358, 76 L. ed. 501, is not in conflict therewith.
It may be noted that the federal statute, by the amendment or reënactment of 1926, has now expressly provided that the tax shall apply to transfers where the transferor has reserved to himself the income from the property during his life. *Page 71