Court Opinion

ID: 195217
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:35:28+00
Date Added: 2024-06-11T09:43:01.257139
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UNITED STATES COURT OF APPEALS
                       FOR THE FIRST CIRCUIT

                                            

No. 93-1602

            ESTATE OF ELIZABETH G. HUNTINGTON, DECEASED,
                 NANCY H. BRUNSON, ADMINISTRATRIX,

                       Petitioner, Appellant,

                                 v.

                 COMMISSIONER OF INTERNAL REVENUE,

                       Respondent, Appellee.

                                            

              APPEAL FROM THE UNITED STATES TAX COURT

              [Hon. Stephen J. Swift, U.S. Tax Judge]
                                                    

                                            

                               Before

                        Selya, Circuit Judge,
                                            
                   Coffin, Senior Circuit Judge,
                                               
                      and Cyr, Circuit Judge.
                                            

                                            

  Michael E. Chubrich for appellant.
                     
  Annette M.  Wietecha, with whom Gary  R. Allen, Ann B. Durney, and
                                                               
Michael L.  Paup, Acting Assistant  Attorney General,  were on brief
                
for appellee.

                                            

                         February 23, 1994
                                            

     COFFIN,  Senior Circuit Judge.  Charles and Myles Huntington
                                  

claim that their stepmother, the  decedent, promised as part of a

reciprocal will agreement with their father that she would devise

her  estate  in  equal  shares  to  them  and  their  stepsister.

Decedent died intestate, leaving the sons without an inheritance.

Their  claim  against her  estate  ultimately led  to  a $425,000

settlement.   The question  posed by this  appeal is  whether the

estate  may deduct  the  settlement amount  for  purposes of  the

federal estate tax.   The answer depends upon  whether the mutual

will agreement was "contracted bona  fide and for an adequate and

full consideration in money or  money's worth," as required by 26

U.S.C.   2053(c)(1)(A).1   After careful review of  the facts and

precedent, we affirm the Tax Court's determination that the claim

is not deductible.

                    

     1 Section 2053 provides in relevant part:

          (a) General rule.--For purposes of the tax imposed
                          
     by section  2001, the value of the taxable estate shall
     be determined by deducting from  the value of the gross
     estate such amounts--
          * * *
          (3) for  claims against the  estate, . . .  as are
     allowable by the  laws of the jurisdiction .  . . under
     which the estate is being administered.
          * * *
          (c) Limitations.--
                         
          (1) Limitations applicable to subsections (a)
                                                       
          and (b).--
                 
          (A)  Consideration   for  claims.--The   deduction
                                          
     allowed  by this section in the  case of claims against
     the estate .  . . shall,  when founded on a  promise or
     agreement,  be limited  to the  extent  that they  were
     contracted  bona  fide  and for  an  adequate  and full
     consideration in money or money's worth . . . .

                               -2-

                               -3-

                      I. Factual Background
                                           

     The decedent, Elizabeth Huntington, married Dana  Huntington

on October 15,  1955.   At that  time, Dana's two  sons from  his

previous  marriage, Charles and Myles, were, respectively, 30 and

28 years old.  Elizabeth and Dana had one daughter, Nancy.

     On January 3, 1978, Dana executed a will in which he devised

to  Nancy, Charles and Myles $25,000 each.   The remainder of his

estate would be held in trust for the  benefit of Elizabeth, and,

upon her death, the trust would terminate and the corpus would be

distributed in equal shares to the three children.  This will was

revoked by Dana on May 8, 1979, when, during the illness that led

to his death, he executed a new will.  The later will stated that

Dana intentionally was making no provision for Charles, Myles and

Nancy.   Instead,  Dana devised  his entire estate  to Elizabeth.

Dana  died  on April  6,  1980, and  his  May 8,  1979,  will was

admitted to probate.

     Charles and  Myles maintain  that their  father changed  his

will in  1979 to  give everything to  Elizabeth only  because she

agreed  to execute  a will  devising  her estate  in three  equal

shares  to  Nancy, Charles  and  Myles.    They point  to  Dana's

previous  will to demonstrate his  intent to make direct bequests

to his sons, and they refer to conversations through the years in

which Dana acknowledged  a moral obligation to leave  part of his

estate  to his  sons in  order to  compensate for  the inadequate

divorce settlement their mother received.

                               -4-

     They also offer direct evidence  of an agreement between the

couple.    Dana's  attorney, William  Beckett,  testified  in his

deposition that, shortly  before execution of the 1979 will, Dana

and Elizabeth discussed the arrangement in which Dana would leave

everything to her and  she shortly would draft a will  that would

include Charles  and Myles.   Also in a deposition,  Myles's wife

testified that  at  the  family  luncheon  immediately  following

Dana's funeral, Elizabeth told her that "`Dana left everything to

me,' meaning herself, with the understanding that upon her death,

everything would  be divided equally between  the boys . .  . and

Nancy . . . ."  See App. at 133.
                   

     Charles and Myles  initially attempted to challenge  the May

8, 1979 will based on their father's alleged mental incompetence.

They dropped  that lawsuit,2 and  on September 10, 1981,  filed a

petition  in Rockingham County  (N.H.) Superior Court  seeking to

impose a  constructive trust on  all of the property  received by

Elizabeth from Dana's estate and on all of the property owned  by

the decedent on and  after May 8, 1979, the date  of Dana's final

will.   They alleged  that Dana and  decedent had  made a binding

oral  agreement to execute  reciprocal wills, and  that Elizabeth

had not yet executed a will in compliance with the agreement.

     On November 12, 1981, the superior court  issued a temporary

restraining  order barring Elizabeth  from taking any  actions to

encumber or transfer the property.  Five years later, on December

                    

     2 They abandoned  this effort because  of the difficulty  of
proving that  the will  was the product  of undue  influence, see
                                                                 
Deposition of Myles Huntington, May 16, 1986, at 27.  

                               -5-

10, 1986, Elizabeth,  Charles and Myles settled  the constructive

trust  lawsuit.   The settlement  provided  that Elizabeth  would

execute a will in which she would devise 20 percent of her estate

to each of  Dana's sons.  Two  weeks later, however,  on December

24, 1986,  Elizabeth died intestate.   Charles and Myles  filed a

notice of claim against her estate  and, subsequently, they filed

a lawsuit to enforce the settlement terms.

     Charles,   Myles,  and   their  stepsister,   Nancy   --  as

administratrix of her  mother's estate -- eventually  settled the

lawsuit brought to enforce the  terms of the earlier constructive

trust  settlement.  Under the second  settlement, Nancy agreed to

pay  to  Charles  and  Myles  a  total  of  $425,000,  an  amount

representing 40 percent of Elizabeth's  estate.  Nancy made  that

payment on April 14, 1989.

     On   the  federal  tax  return  for  Elizabeth's  estate,  a

deduction was taken  for the settlement payment based  on section

2053(a)(3)  of the Internal Revenue Code, which allows deductions

for  "claims against the  estate."3  The  Commissioner disallowed

the deduction,  and calculated  a deficiency  of $117,067  in the

estate tax.4

                    

     3 The estate return was  filed before the settlement reached
among Charles, Myles and Nancy and the amount originally deducted
was $350,000.  The estate later claimed a deduction for the  full
amount of the $425,000 payment.

     4 Both the Tax Court opinion and the Commissioner's brief on
appeal state that the Commissioner rejected the deduction  on the
ground that  the payment  was a  testamentary disposition  rather
than a  claim against  the estate within  the meaning  of section
2053(a).  The Commissioner's Notice of Deficiency did not specify
the basis of the rejection.  See App. at 73.
                                

                               -6-

     The  Tax  Court  affirmed.    It  found  that  the  asserted

reciprocal  will  agreement  between Dana  and  Elizabeth  lacked

adequate  consideration to support a "claim[] against the estate"

within the meaning of section 2053.  The court concluded that the

only consideration  underlying  the agreement  was  the  couple's

"donative   intent,"   making   the   agreement  a   testamentary

arrangement rather than  an arms-length deal providing  the basis

for a deduction.  The  court further held that the lawsuit  filed

by  Charles  and Myles  to  enforce the  alleged  reciprocal will

agreement did not change the essence of the sons' claim so  as to

render their claim deductible. 

     On  appeal,  the  estate  argues  that   Elizabeth  received

substantial  consideration in exchange for her promise to provide

for Charles and  Myles in her will -- the excess amount over what

she would  have received  under Dana's revoked  1978 will  -- and

that  this consideration made  the sons' claim  fully enforceable

and deductible.  In addition,  the estate contends that Elizabeth

also  received valuable consideration when she agreed in December

1986 to settle  the constructive trust lawsuit.   In exchange for

her  promise to  execute  a will  in  which she  would  devise 40

percent of her estate to Charles and Myles, her stepsons released

their claim  to two-thirds  of her estate.   The  estate contends

that either  or both  of these  considerations  is sufficient  to

support its claim to a deduction under section 2053.

     As  there is no  material dispute concerning  the underlying

facts,  our task  is to  determine solely  whether the  Tax Court

                               -7-

properly applied the statute in  these circumstances.  Our review

therefore is de novo. See LeBlanc  v. B.G.T. Corp., 992 F.2d 394,
                                                  

396 (1st Cir. 1993).  

                               II. 

     At the risk of stating the obvious, we think it worth noting

at the  outset that  any analysis of  estate tax  issues must  be

sensitive  to "the general polic[y] of taxing the transmission of

wealth  at death,"  United States  v.  Stapf, 375  U.S. 118,  134
                                            

(1963).  Section 2053 of  the Internal Revenue Code, which allows

deductions from a decedent's gross estate for certain claims, has

been carefully  crafted to promote  that policy.  In  a series of

revisions  to  the  statutory  language  early  in  the  century,

increasingly  formal requirements were imposed on claims based on

promises or agreements, see  Taft v. Commissioner, 304 U.S.  351,
                                                 

355-56 (1938);5 Estate  of Pollard, 52 T.C. 741,  744 (1969), "to
                                  

                    

     5  The history  of  section  2053 was  detailed  in Taft  as
                                                             
follows:

     The Revenue  Act of 1916 permitted the deduction of the
     amount of  claims against  the estate  "allowed by  the
     laws of the  jurisdiction . . . under  which the estate
     is  being administered." . . .  The Act of 1924 altered
     existing  law and  authorized the  deduction of  claims
     against an  estate only  to the  extent that they  were
     "incurred  or contracted  bona  fide  and  for  a  fair
     consideration in money or money's worth."  Congress had
     reason  to think that  the phrase  "fair consideration"
     would be  held to comprehend  an instance of  a promise
     which was  honest, reasonable, and  free from suspicion
     whether or not  the consideration for it  was, strictly
     speaking, adequate.    The  words  "adequate  and  full
     consideration" were substituted  by   303(a)(1) of  the
     Act of 1926.

304 U.S. at 356 (footnotes omitted).

                               -8-

prevent deductions,  under the guise  of claims, of what  were in

reality gifts or  testamentary dispositions," Carney v.  Benz, 90
                                                             

F.2d 747, 749 (1st Cir. 1937).

     In other words, Congress wanted  to be sure that bequests to

family members and other natural objects of the decedent's bounty

were not transformed into deductible claims through collaboration

and creative contracting.  See Bank of New York v. United States,
                                                                

526  F.2d 1012, 1016-17  (3d Cir. 1975); Carney,  90 F.2d at 749;
                                               

Estate  of Satz  v.  Commissioner,  78  T.C. 1172,  1178  (1982);
                                 

Pollard, 52  T.C. at 744.  Thus, a  "claim against the estate" is
       

deductible only  if the  agreement giving rise  to the  claim was

"contracted bona fide  and for an adequate and full consideration

in money or money's worth," 26 U.S.C.   2053(c)(1)(A).

     Thus  far,  this  case  has  focused  primarily  on  whether

Elizabeth  Huntington received  sufficient consideration,  within

the meaning of  section 2053, for her promise  to include Charles

and  Myles  in her  will.    The  Tax Court  concluded  that  the

Huntingtons'  reciprocal  will agreement  was  supported  only by

donative  intent, and  that this  was not  enough to  establish a

deductible claim.   In its notice of appeal and in its brief, the

estate  specifically challenges the Tax Court's failure to credit

as   consideration  Elizabeth's   enhanced  inheritance   --  the

immediate $75,000 representing the bequests previously  earmarked

for Charles, Myles and Nancy, plus absolute rights in the balance

of   Dana's  estate  (in  contrast  to  simply  a  life  estate).

Alternatively, it offers as "adequate and full" consideration the

                               -9-

financial benefit conferred  on Elizabeth when Charles  and Myles

dropped the constructive trust lawsuit in exchange for her second

promise to include them in her will.

     Our view of the caselaw,  reflected against the backdrop  of

section  2053(c)(1)(A)'s limiting purpose,  persuades us that the

real issue here  is not  whether Elizabeth  received a  financial

benefit from the reciprocal will agreement -- clearly, she did --

but  whether  the mutual  promises  made  by Dana  and  Elizabeth

created the sort of "bona fide" contractual obligation for  which

section 2053  allows a deduction.   We have little  difficulty in

concluding that they did not.

     Two  threshold  propositions  inform  our  inquiry.   First,

transactions  among  family  members  are  subject  to particular

scrutiny, even  when they  apparently are  supported by  monetary

consideration, because that is the context in which a testator is

most likely to  be making a bequest  rather than repaying a  real

contractual obligation.  See Bank of New York, 526 F.2d at  1016;
                                             

Estate of Morse  v. Commissioner, 69 T.C. 408,  418 (1977), aff'd
                                                                 

per  curiam, 625 F.2d  133 (1980); Estate of  Woody, 36 T.C. 900,
                                                   

903 (1961).6  Second, we need not be concerned with whether a tax

avoidance  motive was present here,  "because it is the substance

of the arrangement as a potential device for defeating the estate

tax that is of  controlling significance," Estate of Pollard,  52
                                                            

                    

     6 We  note,  however, that  a  close relationship  does  not
necessarily  preclude a deduction under  section 2053.  See infra
                                                                 
at 13-14.  It simply requires  close judicial review.  Estate  of
                                                                 
Morse, 69 T.C. at 418.
     

                               -10-

T.C. at 745.   See also Young v. United States, 559 F.2d 695, 703
                                              

(D.C. Cir. 1977).

     Thus, while  the record  in this  case provides no  evidence

that the Huntingtons sought to defeat estate  taxes through their

reciprocal will agreement, this fact does not assist the estate's

effort  to  overturn  the deficiency  judgment.    The record  is

equally  barren of  evidence indicating  that  the agreement  was

other than a collaborative effort to pass on the family's assets.

From  all that appears in  the record, it  is most plausible that

Dana  and  Elizabeth  discussed   their  respective  desires  for

disposing  of their property, and concluded that everyone's needs

would be  met by the simple  will ultimately executed  by Dana on

May  8, 1979,  and the  will Elizabeth  was expected  to complete

shortly  thereafter.    Such  a  purely  voluntary,  testamentary

arrangement  is not  the product  of  a bona  fide contract,  and

consequently does  not  provide a  basis  for a  deduction  under

section 2053.

     The   estate  suggests  that,   because  Dana  had   a  firm

commitment,  evidenced  by  his  prior  wills,7  to  make  direct

bequests to his  sons, the change in his last will must have been

the product of bona fide  bargaining between the couple.  Neither

the fact that Elizabeth received an immediate advantage, relative

to the earlier wills,  nor Dana's longstanding intention to  make

                    

     7 The will in effect before 1978, which had been executed in
1971, provided  for a bequest  of one-half of his  adjusted gross
estate  to Elizabeth,  and for  the  rest to  pass  to Myles  and
Charles.  

                               -11-

his  sons beneficiaries  of  his estate  is  enough, however,  to

transform  an apparently cooperative  agreement into a  bona fide

contract.  See Estate of Morse, 69 T.C. at 418.
                              

     Dana simply may  have changed his mind about the best way to

provide for  his family, either  before or after  discussion with

Elizabeth.  By passing on his entire  estate to his wife, who was

substantially  younger than  himself, he  could  ensure that  she

would be fully provided for  as long as she  lived.  He may  have

felt that  Charles and  Myles, both well  into adulthood,  had no

immediate need for  the money.  By securing  his wife's agreement

that  the balance  of  both  of their  estates  would be  divided

equally among the couple's three children, he still could fulfill

his moral obligation to Charles and Myles.

     There  is  no  evidence  that  Dana  and  Elizabeth  reached

agreement on the asserted reciprocal wills only after a period of

give-and-take bargaining.   Indeed, Dana's sister  testified that

her brother's  lawyer suggested that  "he not discuss  every last

detail of  his estate  plan [with  Elizabeth] because  . . .  she

would  probably want  to argue  over every  point."   Elizabeth's

wishes may have  played a substantial role in  Dana's decision to

change his will -- she was, after all, his wife -- but the record

is silent as to any form of negotiations.8

                    

     8 In its brief, the estate points to comments allegedly made
by Elizabeth and by Dana's sister, Marjorie, suggesting that Dana
became increasingly vulnerable to Elizabeth's "verbal onslaughts"
during his  illness and  that Elizabeth was  aggressive on  money
issues  after Dana's  death.   This evidence  does  not, however,
reveal  why  and  how  Dana  and  Elizabeth  decided  to  execute
reciprocal wills.

                               -12-

     This  is not  to say  that "hard  bargaining as  would occur

between  hostile parties  is  [] an  absolute  prerequisite to  a

deduction under section 2053," Estate of Morse, 69 T.C. at  419. 
                                              

But when family  members adopt a course of action whose object is

to pass  on their collective  wealth, a deduction for  the amount

ultimately transferred is not permitted under section 2053 unless

there is  some showing  of a bargained-for  exchange.   Any other

conclusion would  seriously undermine  the policy  of taxing  the

transfer of  wealth  at  death.   Where,  as here,  there  is  no

evidence of any type of  negotiations, the claim to deductibility

unquestionably fails for lack of proof.

     The  language of  the Third Circuit  in Bank of  New York v.
                                                              

United States, 526 F.2d at 1017, is equally applicable here:
             

          When the  interests  of  family  members  are  not
     divergent  but coincide  so  that  the  elements  of  a
     transaction advance the separate  concerns of each,  we
     are unable to find the arm's length bargain mandated by
     the  Code.  This  Court has adhered  to the distinction
     between  family  arrangements  bargained  for at  arm's
     length and family arrangements that reflect a community
     of interests.  Tax advantages are not permitted when an
     agreement between members of a family could be regarded
     as  a   cooperative  attempt  to  make  a  testamentary
     disposition rather than as an arm's length bargain.

     Indeed,  on the issue  of arm's-length bargaining,  the case

before us is indistinguishable from Bank  of New York, in which a
                                                     

husband  and wife executed reciprocal wills leaving their estates

first to each other  and then to specifically identified  friends

and relatives.  The wife later  made several changes in her will,

eliminating  one  of  the  husband's   chosen  beneficiaries  and

limiting the bequest to the  other.  The wife's estate eventually

                               -13-

settled with the two disadvantaged beneficiaries, and then sought

to deduct the settlement payment for estate tax purposes.

     The Third Circuit upheld the Commissioner's rejection of the

deduction, concluding that "the value of the claim settled by the

estate may not  be deducted if the  agreement on which the  claim

was based was not bargained at arm's  length."  526 F.2d at 1016.

The court found that no  such bargaining took place there because

the  parties were  "of one  mind" when  they executed  the mutual

wills for the purpose of fixing the ultimate disposition of their

property.  Id.  at 1017.  "There  is nothing in the  record," the
              

court observed, "to support a  finding that the mutual wills here

were  executed as  the result of  an arm's length  bargain of any

sort."  Id.
           

     The court  in Bank of  New York carefully  and appropriately
                                    

distinguished  cases  involving  family   arrangements  in  which

deductions  were upheld, noting  that they involved  "the sort of

agreements  that arise  between  parties  separated by  divergent

interests," id. at 1016-17.  The clearest cases are those arising
               

in the  divorce setting,  where it is  likely that  the estranged

spouses obtain advantages only by trading them for concessions on

other issues.  See, e.g., Leopold v. United States, 510 F.2d 617,
                                                  

624 (9th  Cir. 1975); Estate  of Scholl v. Commissioner,  88 T.C.
                                                       

1265, 1276 (1987).9

                    

     9 Even  in the  divorce context, however,  a claim  will not
always be fully deductible.  See In re Estate of  Hartshorne, 402
                                                            
F.2d 592,  596 (2d  Cir. 1968)  (deduction allowed for  ex-wife's
life interest  in property  but denied  for children's  remainder
interest).  

                               -14-

     In other instances,  courts have upheld deductions  when the

underlying  transactions demonstrated that the claim at issue was

based on a  "purely commercial undertaking,"  Carney, 90 F.2d  at
                                                    

749,  or  was  "[i]n  no sense  .  .  .  a  device for  making  a

testamentary gift," Estate of Woody, 36 T.C. at 904.  In Woody, a
                                                              

deduction  was  allowed for  a  father's $14,000  bequest  to his

daughter  that was intended  as reimbursement for  the daughter's

earlier release of her brother -- at her father's request -- from

an indebtedness  in that specific  amount.  In Carney,  the claim
                                                     

against the  decedent's estate was  based on a guaranty  given by

the decedent  on behalf of  his wife  and daughter  in a  regular

business context. 

     Some  courts have  suggested that  a  bona fide,  deductible

claim  can be  differentiated from  one  that fails  to meet  the

requirements  for deductibility by examining whether the claim is

against  the estate or  to a portion  of the estate.   See, e.g.,
                                                                

Latty v. Commissioner,  62 F.2d 952, 953 (6th  Cir. 1933); Estate
                                                                 

of Lazar  v. Commissioner,  58 T.C.  543, 552  (1972).  In  other
                         

words, if  the  debt underlying  the claim  has its  origin in  a

discretionary desire to pass on wealth to specific individuals --

giving those individuals a claim "to"  a portion of the estate --

it  is  unlikely  to  be  the sort  of  bona  fide,  arm's-length

obligation  that is  deductible under  the  statute.   Deductible

claims will have arisen from transactions that created true debts

"against" the estate.

                               -15-

     The estate,  of course, insists  that there was a  debt here
                                                    

once Elizabeth made her promise and received a financial benefit,

but  then reneged on the deal.  It  may be that, under state law,

the reciprocal will  agreement was an enforceable  contract that,

when  violated, created  a debt  in  favor of  Charles and  Myles

against the estate.  A  valid contract is not necessarily enough,

however,  to establish a deductible claim for purposes of section

2053.  Bank of New  York, 526 F.2d at  1015; see also Stapf,  375
                                                           

U.S. at 131; Luce  v. United States, 444 F. Supp.  347, 350 (W.D.
                                   

Mo., S.D. 1977); Carli v.  Commissioner, 84 T.C. 649, 658 (1985);
                                       

Pollard,  52  T.C. at  744  ("To  be  sure, the  mutual  promises
       

undoubtedly constitute consideration under the law  of contracts.

But the  statute requires more.").   A claim derived  solely from

Dana Huntington's desire to share some portion of his estate with

his sons,  carried out  through cooperative  estate planning,  is

precisely the sort  of "debt" section 2053(c)(1)(A)  was designed

to exclude.  See Bank of New York,  526 F.2d at 1018 ("The policy
                                 

of  section 2053  is to  deny  a deduction  where the  underlying

transaction was `essentially donative in character.'") (citing H.

Rep.  No. 2333,  77th Cong.,  2d Sess.  169 (1942)  (reprinted in

1942-2 Cum.  Bull. 372, 493);  S. Rep.  No. 1631, 77th  Cong., 2d

Sess. 238 (1942) (reprinted in 1942-2 Cum. Bull. 504, 679)).

       Nor  does the  subsequent  court-approved settlement  with

Elizabeth's  estate  transform  the claim  into  an  arm's-length

transaction within the meaning of section 2053.  The Bank  of New
                                                                 

York case again is directly on point:
    

                               -16-

          To  effectuate the  policy underlying  the federal
     estate  tax  requires  that  courts  look  beneath  the
     surface  of  transactions  to  discover  the  essential
     character  of each  transfer.   Even  where a  claim is
     ultimately  satisfied  by  the operation  of  law,  the
     courts  will  determine  the nature  of  the  claim for
     federal tax purposes by examining the particular status
     of the claimant that enabled him to impose his claim on
     the estate.

526 F.2d  at 1017.   See  also Luce,  444  F. Supp.  at 354;  cf.
                                                                 

Phillips  v.  Gnichtel,  27  F.2d  662,  663-64  (3d  Cir.  1928)
                      

(involving  transfers made "in contemplation of death," which are

included in gross estate except in case  of "a bona fide sale for

a fair  consideration in  money or  money's worth")  ("[W]e [are]

inclined to go  to the heart of  the transaction and find,  if we

can, just  what the parties intended, just what they did and what

was the precise result.").

     Our  examination  of the  issue  of arm's-length  bargaining

helps bring into  focus the parties' dispute  over consideration.

If  the reciprocal  will  agreement  did represent  collaborative

estate  planning  by  the Huntingtons,  the  fact  that Elizabeth

received  a larger  direct bequest than  she would  have received

under  Dana's  prior  will  is   of  no  consequence.    In  such

circumstances, the  increase  would  reflect  changed  priorities

rather  than a  bargained- for  "consideration."   Cf.  Estate of
                                                                 

Morse, 69 T.C. at 418 ("[A] consideration hypothetically full and
     

adequate  within the  statutory meaning  has no relevance  if the

asserted consideration was  not part of  the bargain between  the

parties."); Estate  of Morse, 625  F.2d at 135 ("[T]he  Tax Court
                            

was correct  in ruling  that it was  necessary to show  that such

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consideration was  so bargained  for .  . . .").10   The  problem

with  the Huntington sons'  claim therefore may  be characterized

alternatively  as  a failure  of  proof  of  "full  and  adequate

consideration."

     We need not  decide today whether there may  be some factual

circumstances  in  which  a  claim  that   began  with  a  wholly

discretionary   desire  to  make   a  bequest  can   fulfill  the

requirements of section 2053 for a "bona fide" contract supported

by  "an adequate  and  full  consideration  in money  or  money's

worth."   It suffices to  say that,  in this case,  the requisite

attributes of a deductible claim were not shown.

     The decision of the Tax Court is affirmed.
                                              

                    

     10 In  Estate of Morse,  decedent and his wife  negotiated a
                           
detailed  antenuptial agreement to take care of various financial
concerns,  including  the   wife's  loss  of  income,   upon  her
remarriage,  from  a  trust established  by  her  former husband.
Decedent agreed  that, after  his death,  his wife would  receive
$12,000 per year during her life from his estate (the same amount
as provided by the forfeited trust).
     The Tax  Court held  that the commuted  value of  the wife's
right to  receive the $12,000  was not deductible for  estate tax
purposes as  a claim against  her husband's estate  under section
2053.    The court  rejected the  contention that  the decedent's
right to live in his  wife's house rent-free during his life,  if
he had  survived  her, was  consideration  for his  agreement  to
provide her  with the  $12,000 income.    69 T.C.  at 418  ("[A]n
examination of the  facts and circumstances of  this case reveals
an absence of bargaining . . . .").

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