Court Opinion

ID: 4495390
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:18.403105+00
Date Added: 2024-06-11T15:04:02.817201
License: Public Domain

A.eundkll,
dissenting: The majority opinion proceeds upon the theory that the retained power of the decedent to fix the share of each of the group of remaindermen, being but a “power to supplement, amplify or make more specific ”, was not a power to “ alter ” or “ amend ”, hence does not come within the literal words of the statute. The power to fix the share of each one of the group would seem to be a power' to change the enjoyment through the exercise of a power to alter or amend. On failure to exercise the power, each of the remaindermen would share equally; by an exercise of it the shares could be verjr materially changed. As long as the creator of the trust lived there was the possibility of exercise, and her death was “ the source of valuable assurance passing from the dead to the living. That is the event on which Congress based the inclusion of property so transferred * *.” Porter v. Commissioner, 288 U. S. 436. It is no doubt true, as contended by petitioners, that each of the remaindermen had a vested interest in the trust property. But it is equally true that the decedent had the power-to change materially the portion which any oaie, or all, would ultimately enjoy. The statute requires the inclusion of all. property transferred in trust “ the enjoyment of which remains at the time of his death subject to any change by the exertion of a power by himself alone or in conjunction with another.” Porter v. Commissioner, supra. If the trust instrument “contain a right to change the enjoyment, it is within the terms of the act.” Dort v. Helvering, 69 Fed. (2d) 836. Granting the correctness of the majority opinion that the power was one to “ supplement ” or “ modify ” it woidd seem that any supple*338ment or modification of the share of any of the group of remainder-men would effect a “ change by the exertion of a power.” Porter v. Commissioner, supra. The fact that the power to change is given in the trust instrument and that any exercise would have been in compliance with the provisions of the instrument seems entirely immaterial. Powers to alter, amend, or revoke, where they exist, are usually contained in the trust instrument, and they must be exercised in accordance with the provisions thereof.
It seems to me that the question presented here is governed by the decision in H. T. Cook et al., Executors, 23 B. T. A. 335; affirmed by the Circuit Court of Appeals for the Third Circuit, 66 Fed. (2d) 995, on authority of the Porter case. In that case, as here, the power of the creator of the trusts ivas limited to those of a group of beneficiaries, and it was held that the trust property was part of the gross estate under section 302(d).
Smith, Seawell, and Turner agree with this dissent.