Goldstone v. United States
325 U.S. 687 (1945)

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U.S. Supreme Court

Goldstone v. United States, 325 U.S. 687 (1945)

Goldstone v. United States

No. 699

Argued April 26, 1945

Decided June 11, 1945

325 U.S. 687

Syllabus

Decedent purchased from an insurance company two single premium contracts. The first contract insured the decedent's life and provided for payment of the proceeds to his wife or, if she predeceased him, to their daughters, and if the decedent survived all beneficiaries, the proceeds were to be paid to his executors or administrators. The second contract, which the decedent was required to purchase in lieu of a physical examination, provided for semi-annual payments to the decedent during his lifetime and for payment of a specified amount to his wife upon his death, or, if she predeceased him, to the daughters, and if they were not then living, to his estate. Each contract provided that the wife, during her lifetime, should have the right to assign it, to borrow money on it, to receive dividends, to change the beneficiaries, and to surrender the contract and obtain its cash surrender value. If the wife predeceased the decedent, those powers were to pass to him. Decedent was 63 years of age when the contracts were purchased, and died nearly five years later, survived by his wife and daughters. His wife had not surrendered, assigned or alienated either contract prior to his death.

Held:

1. The contracts, which must be considered together, involved no true insurance risk; therefore, § 302(g) of the Revenue Act of 1926, relating to amounts receivable "as insurance under policies taken out by the decedent upon his own life," was inapplicable. Helvering v. Le Gierse,312 U. S. 531. P. 325 U. S. 690.

2. For purposes of the federal estate tax, the proceeds of the contracts were includible in the gross estate of the decedent, under § 302(c) of the Revenue Act of 1926, as an interest of which the decedent had made an inter vivos transfer "intended to take effect in possession or enjoyment at or after his death." P. 325 U. S. 690.

3. The decedent's death was the decisive fact that terminated all of his potential rights and insured the complete ripening of the wife's interests. The transfer of the proceeds of the contracts having been effectuated finally and definitely at the decedent's death, § 302(c) requires that those proceeds be included within the decedent's gross estate. P. 325 U. S. 692.

Page 325 U. S. 688

4. The essential element here is the decedent's possession of a reversionary interest at the time of his death, which postponed until then the determination of the ultimate possession or enjoyment of the property. The existence of such an interest constitutes an important incident of ownership sufficient, in itself, to support the imposition of the estate tax. Helvering v. Hallock,309 U. S. 106. P. 325 U. S. 692.

5. Imposition and computation of the federal estate tax are based upon interests in actual existence at the time of the decedent's death. Events which would have extinguished the decedent's reversionary interest had they occurred, but which did not occur, must be ignored. P. 325 U. S. 693.

144 F.2d 373, affirmed.

Certiorari, 324 U.S. 833, to review the affirmance of a judgment, 52 F.Supp. 704, dismissing the complaint in a suit for a refund of federal estate taxes.

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