Decedent made a transfer of property in trust to pay the income
to herself for life, thence to her two daughters, with remainders
to the daughters' surviving descendants, but if both daughters
should die without descendants surviving, the corpus was to go to
such persons as the decedent should appoint by will. Decedent
exercised the power of appointment by will and predeceased the
1. The transfer was "intended to take effect in possession or
enjoyment at or after (decedent's) death," within the meaning of §
302(c) of the Revenue Act of 1926. P. 324 U. S.
2. The value at the date of the death of the decedent of the
entire corpus of the trust was includible in the gross estate of
the decedent for the purpose of the estate tax under the 1926 Act.
P. 324 U. S.
Under § 302(c), the taxable gross estate must include those
property interests the ultimate possession and enjoyment of which
is held in suspense until the moment of the grantor's death or
3. There was no basis for deduction from the decedent's gross
estate of the values of the estates of the daughters or their
descendants. P. 324 U. S.
142 F.2d 838 affirmed.
Certiorari, 323 U.S. 693, to review the affirmance of a judgment
denying recovery in a suit for refund of federal estate taxes.
Page 324 U. S. 109
MR. JUSTICE MURPHY delivered the opinion of the Court.
Our attention here is directed toward the proper valuation for
federal estate tax purposes of the corpus of an inter
trust where the transfer was intended to take effect in
possession or enjoyment at or after death and where the settlor
retained a life estate in the trust income and a reversionary
interest in the corpus.
On March 26, 1928, the decedent, Anna C. Stinson of Bryn Mawr,
Pa., transferred certain property in trust, the value of which at
the time of her death was $84,443.49. The income of the trust was
to be paid to the settlor during her life and, at her death, to her
daughters (aged 12 and 10 at the time of the creation of the trust)
during their respective lives. At the death of each daughter, the
corpus supporting her share of the income was to be paid to her
descendants. If either daughter died without leaving surviving
descendants, the corpus of her share was to be added to the share
of the other daughter or of the surviving descendants of the other
daughter. But if both daughters died without leaving surviving
descendants, the corpus was to be paid to such persons as the
settlor might appoint by will. In default of such appointment, the
corpus was to go to certain named charities.
The decedent exercised the power of appointment in a will made
in 1930. She died in 1934 at the age of 51, leaving two unmarried
daughters. The latter have subsequently married, and both have
The Commissioner determined that this arrangement was a transfer
in trust intended to take effect in possession or enjoyment at or
after death within the meaning of Section 302(c) of the Revenue Act
of 1926, 44 Stat. 9, 70, and that the net value of all the property
comprising the corpus of the trust should be included in the
decedent's gross estate for estate tax purposes. The executors,
however, denied that the transfer fell within the meaning of
Page 324 U. S. 110
Section 302(c); they further claimed that, even if Section
302(c) did apply, the value of the life estates of the settlor's
daughters and the value of the remainders to their surviving
descendants should be deducted from the value of the trust assets
for tax purposes.
The executors paid a tax on the full value of the trust assets
and filed this claim for refund of the tax. The District Court
denied recovery, and the court below affirmed. 142 F.2d 838.
Conflict with Field's Estate v. Commissioner,
144 F.2d 62,
led us to grant certiorari, 323 U.S. 693, limited to the question
of whether the entire value of the corpus of the trust at the time
of decedent's death should have been included in the decedent's
The courts below, utilizing the principles set forth in
Klein v. United States, 283 U. S. 231
Helvering v. Hallock, 309 U. S. 106
correctly held that the decedent's transfer in trust in 1928 was
one intended to take effect in possession or enjoyment at or after
death within the meaning of Section 302(c) of the Revenue Act of
1926, prior to the amendments of 1931 and 1932. While the matter of
valuation was not argued and was not directly in issue in those
cases, the inescapable consequence of the principles enunciated
there and in the dissenting opinion in Helvering v. St. Louis
Union Trust Co., 296 U. S. 39
296 U. S. 46
to include the entire trust corpus in the gross estate of the
decedent under these circumstances.
Section 302(c) itself provides for the inclusion within the
gross estate of property
"to the extent of any interest therein of which the decedent has
at any time made a transfer, by trust or otherwise, in
contemplation of or intended to take effect in possession or
enjoyment at or after his death."
As we said in Helvering v. Hallock, supra,
309 U.S. at
309 U. S.
-111, this provision
"deals with property not technically passing at death but with
interests theretofore created. The taxable event is a transfer
Page 324 U. S. 111
the measure of the tax is the value of the transferred property
at the time when death brings it into enjoyment."
Cf. Reinecke v. Northern Trust Co., 278 U.
, 278 U. S. 347
The taxable gross estate, in other words, must include those
property interests the ultimate possession or enjoyment of which is
held in suspense until the moment of the grantor's death or
Tested by that standard, the entire corpus of the trust should
have been included in the decedent's gross estate, and an estate
tax levied on its net value at the date of decedent's death. The
ultimate disposition of all the trust property was suspended during
the life of the decedent. Only at or after her death was it certain
whether the property would be distributed under the power of
appointment or as provided in the trust instrument. The life
estates of the daughters were contingent upon their surviving their
mother, and took effect in enjoyment only at the death of the
latter. The remainder interests of the descendants of the daughters
were contingent upon their surviving both the decedent and the
daughters, and took effect in possession only after the death of
the decedent. Thus, until the moment of her death or until an
undetermined time thereafter, the decedent held a string or
contingent power of appointment over the total corpus of the trust.
The retention of such a string, which might have resulted in
altering completely the plan contemplated by the trust instrument
for the transmission of decedent's property, subjected the value of
the entire corpus to estate tax liability.
It is fruitless to speculate on the probabilities of the
property's being distributed under the contingent power of
appointment. Indeed, such speculation is irrelevant to the
measurement of estate tax liability. The application of this tax
does not depend upon "elusive and subtle casuistries."
Helvering v. Hallock, supra,
309 U.S. at 309 U. S. 118
Page 324 U. S. 112
should the measure of the tax depend upon conjectures as to the
propinquity or certainty of the decedent's reversionary interests.
It is enough if he retains some contingent interest in the property
until his death or thereafter, delaying until then the ripening of
full dominion over the property by the beneficiaries. The value of
the property subject to the contingency, rather than the actuarial
or theoretical value of the possibility of the occurrence of the
contingency, is the measure of the tax. That value is demonstrated
by the consequences that would flow in this instance from the
decedent's survival of her daughters and any of the latter's
We are not concerned here with determining whether the values of
any property interests or intervening estates not affected by the
decedent's death and not subject to the contingent power of
appointment should be deducted from the value of the corpus. The
value of the life estate retained by the decedent obviously cannot
be deducted. And the life estates of the daughters and the
remainder interests of their surviving descendants were all subject
to divestment by the contingent power of appointment, and were
freed from this contingency only at or after the decedent's death.
There is thus no basis for deducting their values as suggested by
MR. JUSTICE DOUGLAS, concurring.
The District Court found that this trust was "intended to take
effect in possession or enjoyment at or after" the death of the
decedent. The Circuit Court of Appeals agreed. Certiorari was not
granted on that question, but only on the question whether the
entire value of the corpus of the trust at the time of decedent's
death should be included in her gross estate. So, in this case, as
in Commissioner v. Field, 324 U.
, we are
Page 324 U. S. 113
not faced with the question whether May v. Heiner,
281 U. S. 238
should survive Helvering v. Hallock, 309 U.
. On the findings of the District Court, it is
plain that the entire corpus must be included in decedent's gross
estate by virtue of Section 302(c) of the 1926 Act unless the value
of the life estate must be deducted. The value of the life estate
deducted in the Hallock
case was the life estate in the
settlor's wife. It was excluded because it took effect in
possession or enjoyment when the trust was created. The life estate
which the decedent reserved to herself is obviously in a different
category. It is not an "outstanding life estate" within the meaning
of Treasury Regulations 80, Art. 17.
I would rest the decision there, and reserve judgment on the
other questions adverted to in the opinion of the Court.