Court Opinion

ID: 4491828
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:03:04.96767+00
Date Added: 2024-06-11T15:03:56.936632
License: Public Domain

Matthews,
dissenting: I dissent from the majority opinion in so far as it relates to the trusts. All the trusts in question (except the so-called Trust No. 3) were executed while the Bevenue Act of 1918 was in force and none of the trusts was made in contemplation of death. The 1918 Act had no. counterpart of subdivisions (d) and *1031(b) of section 302 of the Revenue Act of 1926. The shifting in the economic interest in the trust property was complete as soon as the trusts were made. The donor parted with the legal title and all beneficial interest. He reserved no power to revoke the trusts, by ' which he could recall the trust property. The power reserved was to alter or amend in any manner in so far as the interests of third parties were concerned, but not in such manner as to be in his own favor or in favor of his estate. The alteration or amendment of Trusts Nos. 1 and 2 by the instrument designated Trust No. 3 did not have the effect of revesting the property in the donor and the retransfer of such property to the trustees. It was not, therefore, equivalent to the creation of a new trust.
It seems to me that these trusts are in all material respects similar to the five trusts which in Reinecke v. Northern Trust Co. were held not to be subject to the tax imposed by reason of the provisions of sections 401 and 402 (c) of the Revenue Act of 1921. Section 402 (c) of the Revenue Act of 1921 is identical to the same section of the Revenue Act of 1918. The trusts were not made in contemplation of death; the donor had divested himself of all economic interest in the trust property at the time he created the trusts; the power to alter or amend was not broad enough to revest in him or his estate any interest in the property, and there was no provision in the estate-tax act then in force taxing transfers in trust not made in contemplation of death, where the power to alter or amend is reserved. As Mr. Justice Stone said in Reinecke v. Northern Trust Co., 278 U. S. 339:
* * * The shifting of the economic interest in the trust property which was the subject of the tax was thus complete as soon as the trust was made. His power to recall the property and of control over it for his own benefit then ceased and as the trusts were not made in contemplation of death, the reserved powers do not serve to distinguish them from any other gift inter vivos not subject to the tax.
See also May v. Heiner, 281 U. S. 238. As the transfers were nontaxable when made, they can not be subjected to tax by a later estate-tax act. They are in the same class as trusts made in contemplation of death before the 1916 estate-tax act was passed, by. persons who died subsequent thereto, and with gifts made in 1924 before the gift-tax act was enacted. The Supreme Court has held that such trusts and gifts can not be subjected to the tax. See Shwab v. Doyle, 258 U. S. 529; Nichols v. Coolidge, 274 U. S. 531; Blodgett v. Holden, 275 U. S. 142; 276 U. S. 594, and Untermyer v. Anderson, 276 U. S. 440. T think the transfers by the trusts here in question are not subject to the tax imposed by sections 301 and 302 (d) and (h) of the Revenue Act of 1926.