Allen v. Trust Company of Georgia - 326 U.S. 630 (1946)


U.S. Supreme Court

Allen v. Trust Company of Georgia, 326 U.S. 630 (1946)

Allen v. Trust Company of Georgia

No. 289

Argued January 3, 4, 1946

Decided January 28, 1946

326 U.S. 630

Syllabus

In 1925, decedent established two spendthrift trusts for his children, transferring securities to each trust and reserving the power to amend with the consent of the trustee and beneficiary. In 1934, he added securities to each trust. He paid gift taxes on these transfers. Learning in 1937 that, under a recent decision of this Court, the reservation of the power to amend brought the corpus of the trust into the settlor's estate for estate tax purposes, he renounced the power to amend. He died in 1938 at the age of 82. The Commissioner of Internal Revenue included the corpus of each trust in his estate and collected the estate tax on it. The executors sued for a refund. Both the district court and the circuit court of appeals found that decedent established the trusts to meet the necessities of his children by giving them property freed of all claims, tax or otherwise, and that he renounced the power to amend

Page 326 U. S. 631

in order to accomplish the purpose which he originally had, but which he later discovered had not been achieved.

Held:

1. Those findings are sufficient to overcome the statutory presumption that the renouncement of the power to amend, being made within two years of decedent's death, was made in contemplation of death within the meaning of § 302(d) of the Revenue Act of 1926. P. 326 U. S. 635.

2. The question whether a donor's dominant motive is associated with life, rather than with the distribution of property in contemplation of death, is a question of fact in each case. P. 326 U. S. 636.

3. Where the question arises out of a series of transactions all related to the same purpose, it is not proper to isolate one transaction from all the others and treat it as a wholly independent transaction. P. 326 U. S. 636.

4. Where the dominant purpose of a series of transactions is to provide for the donor's children, the fact that the purpose of the last transaction is to rectify an error which would have subjected the corpus of the trust to an estate tax does not lead to the conclusion that it was a transaction in contemplation of death within the meaning of § 302(d) of the Revenue Act of 1926. P. 326 U. S. 636.

149 F.2d 120, affirmed.

Certiorari, post, p. 700, to review affirmance of a judgment, 55 F.Supp. 269, against a Collector of Internal Revenue for a refund of an overpayment of an estate tax.



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