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273 U.S. 545

47 S. Ct. 461

71 L. Ed. 764

Docket No. 193.

Shukert v. Allen

Supreme Court of the United States

Argued March 4, 7, 1927.

Decided March 21, 1927.

Supreme Court of the United States · decided 1927-03-21

2 counsel of record

Key passage — most relied on by later courts

““It seems to us tolerably plain that, when the grantor parts with all his interest in the property to other persons in trust, with no thought of avoiding taxes, the fact that the income vested in the beneficiaries was to be accumulated for them, instead of being handed to them to spend, does not make the trust one intended to take effect in possession or enjoyment at or after the grantor’s death.””

quoted by 3 later decisions, including Reinecke v. Northern Trust Co., St. Louis Union Trust Co. v. Becker

““In its plan and scope the tax is one imposed on transfers at death or made in contemplation of death and is measured by the value at death of the interest which is transferred. * * * One may freely give his property to another by absolute gift without subjecting himself or his estate to a tax, but we are asked to say that this statute means that he may not make a gift inter vivos, equally absolutely and complete, without subjecting it to a tax if the gift takes the form of a life estate in one with remainder over to another at or after the donor’s death. It would require plain and compelling language to justify so incongruous a result and we think it is wanting in the present statute. * * * “In the light of the general purpose of the statute and the language of section 401 explicitly imposing the tax on net estates of decedents, we think it at least doubtful whether the trusts or interests in a trust intended to be reached by the phrase in section 402 (c) ‘to take effect in possession or enjoyment at or after his death,’ include any others than those passing from the possession, enjoyment or control of the donor at his death and so taxable as transfers at death under section 401. That doubt must be resolved in favor of the taxpayer. * * *»”

quoted by 2 later decisions, including Reinecke v. Northern Trust Co., Tait v. Safe Deposit & Trust Co.

Relies on The Fisheries Products Company, Receivers of the Fisheries Products Company v. Abraham S. See & Depew, Inc. · Shukert v. Allen · Shukert v. Allen

Good law ✅— No negative treatment on recordhow we know

Reversed · 9–0 · Decided 1927-03-21

How this case has been cited

Cited by 111 later decisions (9 by the Supreme Court) — most recently March 1981 · most notably Helvering v. Hallock (1940), Reinecke v. Northern Trust Co. (1929)

33 federal appellate · 11 district · 18 state decisions

5001927193019401950196019701980decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

¶1CERTIORARI TO THE CIRCUIT COURT OP APPEALS POR THE EIGHTH CIRCUIT.

¶2A conveyance of securities made before the testator’s death and not in contemplation of it, in trust to accumulate the income until a distant- date speeified, and then to divide the fund among his children, designated by name as the beneficiaries, vested the interests of his children when it was executed and was not “intended to take effect in possession, or enjoyment at or after his death,” within the meaning of § 402(c), Revenue Act of 1918. P. 547.

¶36 F. (2d) 551, reversed.

¶4’ Certiorari (269 U. S. 543) to a judgment of the Circuit Court of Appeals, which affirmed a judgment of the Dis*546trict Court. (300 Fed. 754) directing a verdict for the Collector in an action to recover money paid under protest as a estate tax · Case Law">federal estate tax.

¶5Messrs. William B. Mcllvaine and Arthur F. Mullen, with whom Mr. J. F. Dammann, Jr., was on the briefs, for petitioners.

¶6Mr. Thomas H. Lewis, Jr., with whom Solicitor General Mitchell, Assistant Attorney. General Willebrandt, Mr. A. W. Gregg, General Counsel, Bureau of Internal Revenue, and Mr. Bewail Key, Attorney in the Department of Justice, were on the briefs, for respondent.

¶7Mr. Justice Holmes

¶8delivered the opinion of the Court.

¶9This is a suit to recover the amount óf a federal estate tax paid by the plaintiffs, petitioners, under duress. The District Court directed a verdict for the defendant, the collector, 300 Fed. 754, the judgment upon which was affirmed by the Circuit Court of Appeals. 6 F. (2d) 551. A writ of certiorari was granted by this Court. 269 U. S. 543.

¶10The tax was levied under the Revenue Act of 1918; February 24, 1919, c. 18, § 402(c); 40 Stat. 1057, 1097, which provides that the value of the gross estate of -the decedent shall be determined by including all property “ To the extent of any interest therein of which the decedent has at any time made a transfer, or with, respect to which .he has created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death,” &c. By §.401 the tax is laid upon the transfer of the net estate. The transfer taxed in this case was made by the testator on May 5, 1921, and was a conveyance to the. United .States Trust Company of. Omaha of notes and bonds valued at $225,000, par, in trust to accumulate the income (subject to certain small.deduc*547tions in case of the extreme destitution of the testator’s wife or of any of the beneficiaries named) until February 1, 1951, unless the last of the beneficiaries should have died more than twenty-one years before that date, &c., and then to divide the principal and undistributed income among his three children by name. The téstator died' on September 29,1921, a few.months after creating this trust, but it is not argued that he created it contemplation of death · Case Law">in contemplation of death as a device to escape taxes. The only question is whether the trust was one intended to take effect in possession or enjoyment after his death, as was ruled below.

¶11. The transfer was immediate and out and out, leaving no-interest remaining in the testator. The trust in its terms has no reference to his death but is the same and unaffected whether he-lives or dies. Although the Circuit Court of Appeals seems to have thought otherwise, the interest of the children respectively was vested as soon as the instrument was executed, even though it might have been divested as to any one of them in favor of his issue if'any, or of the surviving beneficiaries, if he died before the termination of the trust. See Gray, The Rule Against Perpetuities, § 108(3). It seems plain from the little evidence that was put in that the testator was not acting in contemplation of death as a motive for his act, or otherwise, except-in the sense that he was creating a fund intended to secure his children from want in their old age,1 whoever might dissipate the considerable property that he retained and left at his death; and that being fifty-six years old, if he thought about it, he would have contemplated the possibility or probability of his being dead' before the emergency might arise. Of course it was not argued that every vested interest that manifestly would take effect in actual enjoyment after the grantor’s death was within the statute. There certainly is no transfer taking effect after his death to be; taxed under § 401.

¶12*548It is not necessary to consider whether the petitioner goes too far in contending that § 402(c) should be construed to refer only to transfers of property the possession or enjoyment of' which does not pass from the grantor until his death. But it seems to us tolerably plain, that when the grantor parts with all his interest in the property to other persons in trust, with no thought of avoiding taxes, the fact that the income vested in the beneficiaries was to .be accumulated for them instead of being handed to them to spend, does not make the trust one intended to take effect in possession or enjoyment at or after the grantor’s death.

¶13Judgment reversed.

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