Court Opinion

ID: 7356269
Source: CourtListenerOpinion
Date Created: 2022-07-26 04:24:36.351879+00
Date Added: 2024-06-11T16:20:29.064685
License: Public Domain

FOWLER, S.
This is an application to exempt from taxation the corpus of a trust fund passing by virtue of a deed of trust executed by the decedent. The deed was executed in 1902. The decedent was at that time a resident of Rhode Island, but the property transferred by the deed of trust consisted of bonds located- in this state. The deed provided that the income from the trust fund be paid to William B. Schermerhorn during his life, and upon his death that the corpus be paid to the grantor, or in the event of the death of the grantor prior to the death of the cestui que trust the corpus to be paid to the grantor’s next of kin in the proportion prescribed by the intestate laws of the state of New York. The grantor reserved to. himself the right to alter or modify the deed of trust or to revoke and terminate it. He died in 1903 without modifying or revoking it. The cestui que trust died in 1911, and the corpus was then distributed among the grantor’s next of kin. They contend that it is not subject to a transfer tax. The transfer tax statute in force at the time the deed of trust was executed provided that a tax should be imposed upon the transfer of property *96effected by deed or gift intended to take effect in possession or enjoyment at or after the death of the grantor. The corpus of the trust fund created by the deed of trust executed by the grantor could not take effect in the possession or enjoyment of the grantor’s next of kin until after his death, because the deed provided that in the event of the death of the cestui que trust during the lifetime of the grantor the trust should terminate and the corpus of the trust fund should be paid to the grantor. Therefore the right of the next of kin to the property transferred by the deed of trust did not become absolute until the death of the grantor. The reservation of a power of revocation or resettlement to new uses by a settlor of an estate is always his property, and in some cases may amount to a fee simple in the settlor. This is well understood by property lawyers. In this matter if the grantor had made an absolute gift of the property and divested himself of all right of ownership in or dominion over it, its transfer would not be subject to a tax, but the fact of his having reserved to himself the right to modify or amend the deed of trust, or to revoke or terminate it, shows that he did not make an absolute gift of the property, and that he could, at any time during his life, have revoked the gift and recovered possession of the property. Until his death, therefore, there was no completed gift to the remaindermen; and as the transfer to the next of kin could not take effect in possession or enjoyment until after the death of the grantor, the property so transferred is subject to a tax. Matter of Cruger, 54 App. Div. 405, 66 N. Y. Supp. 636, affirmed 166 N. Y. 602, 59 N. E. 1121; Matter of Green, 153 N. Y. 223, 47 N. E. 292; Matter of Bostwick, 160 N. Y. 489, 55 N. E. 208.
Application for exemption denied. Submit order designating appraiser.