Court Opinion

ID: 4499178
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:16:20.19985+00
Date Added: 2024-06-11T15:04:06.587147
License: Public Domain

Disney,
dissenting: I can not agree with the majority opinion on the first issue. In the Klein case the taxpayer had a reversion in fee if the wife died first. In the HaTloek case the trust principal and income reverted to him if the wife died. In the Bryant case the trust income reverted to him if the wife died first, and the principal later went to his estate at his death. Also, he had the power to revoke, if he survived. Such interests were held to cause taxation to the estate of the decedent.
*794Ballard, if he survived his wife, also would receive a reversion, that is, of the right to alter, amend or revoke. His death put an end to such a contingency. It is true that his death transmitted nothing to his wife, because he had already conveyed to her the power to alter, amend, or revoke; but it seems to me that his death did transmit rights to the children, that is to say, it freed their interests from the possibility that he, if he survived, might alter, amend, or revoke. Their interests, in other words, were subject to two contingencies, first, that the wife during her lifetime might alter, amend, or revoke, and if she did not revoke, secondly, the husband might, if he survived her, alter, amend or revoke. The second contingency was removed by his death, leaving only the contingency that she might alter, amend, or revoke. Therefore it would appear that by the death of the decedent, although nothing passed to the wife, something passed to the children, because when he died there was left only the contingency that the wife might alter, amend, or revoke. If he had survived, a very serious possibility, that of complete revocation, would have faced the beneficiaries’ interests. His death obliterated that possibility and something was transmitted by virtue of his death to the beneficiaries, unless it can soundly be said that, since he had given the right to revoke, etc., to his wife, prior to death, he had! no such right to transmit by his death. The fact that he did give it to his wife does not seem to be the answer, because he gave it to her only for her life, retaining that power after her death, and his death prior to hers removed that possibility and transmitted an interest to the beneficiaries in the same way that it would have done so, if he had survived and later died. Certainly, if he had survived, thereby reassuming the right to revoke, his death would have transmitted rights to the beneficiaries. His death prior to any such survival, that is prior to his wife’s death, likewise terminated a possibility, the only difference being that it was a mere contingent possibility. Since in the Klein, Bryant, and Halloch cases, death having put an end to a contingent or reversionary interest, is held to have transmitted a right, and therefore to cause taxation to the estate, the same transmittal and taxation here seem to follow, for the only difference is that there is transmission of a second contingency, instead of a first, to the beneficiaries.
The children could not receive the estate until both father and mother were dead, without exercising the power to revoke. Therefore the deaths of both transmitted rights to the children, the husband’s transmission being merely subject to the contingency that the wife did not herself revoke. I dissent.
Smith and Qppek agree with this dissent.