200 A.D. 259 | N.Y. App. Div. | 1922
By section 220 of the Tax Law (as amd. by Laws of 1911, chap. 732), entitled “ Taxable transfers,” it is provided (as it stood on May 1, 1915): “ A tax shall be and is hereby imposed upon the transfer of any tangible property within the State and of intangible property, or of any interest therein or income therefrom, in trust or otherwise, to persons or corporations in the following cases, subject to the exemptions and limitations hereinafter prescribed:
“1. When the transfer is by will or by the intestate laws of this State of any intangible property, or of tangible property within the State, from any persons dying seized or possessed thereof while a resident of the State. * * *
“ 4. When the transfer is of intangible property, or of tangible property within the State, made by a resident, * * * by deed, grant, bargain, sale or gift made in contemplation of the death of the grantor, vendor or donor or intended to take effect in possession or enjoyment at or after such death.”
A bona fide transfer of property between the living, unless made in contemplation of death or intended to take effect in possession or enjoyment at or after death, is not within the reach of the transfer tax.
The proceeds of a life insurance policy, made payable to the assured or to his estate upon his death, comes into his estate at his death, and then becomes a part of his estate. As such it is transferred as a part of his estate under his will or the intestate laws of the State. Such transfer of the proceeds is taxable. (Matter of Knoedler, 140 N. Y. 377.) But if such a policy is payable, and is paid, to some other beneficiary named, its proceeds never
After the assignments (not now considering the trust deeds) the trustee had the same rights in relation to the property assigned before the death of the insured as it had after. The insured did not assign the policies in contemplation of death in any sense other than in the recognition that at some time he must die, or than any person contemplates when he procures a policy payable after his death; nor, within the meaning of the statute, did he perform these acts in the transfer of property to take effect at or after death only. A man who changes the name of a beneficiary in a life insurance policy, issued on his life and payable after his death, . does not in the meaning of the statute make a transfer of property to take effect at or after death. The assignments of these policies were by instruments absolute in terms, which contained no reservations or conditions, separate from the trust deeds. The policies were delivered in Pennsylvania ■ when the assignments were made and remained there until the death of the insured. When the assignments and policies were so delivered the transaction was complete; the assignee then acquired an immediate right to the proceeds of the policies when payable; and this conclusion is not mistaken, because of the fact that, under the terms of the policies, the assured could again change the beneficiary. (Matter of Parsons, supra.) After his death the proceeds of each policy was paid to the assignee in Pennsylvania, who then stood under the assignments in the same position as if named the beneficiary in the policy. The proceeds never came into his estate.
The interesting question in this case is presented by the reservation in the trust deeds of the power to revoke the trust deeds by a formal instrument of revocation “ whereupon said trustees. shall release all right, title and interest in and to said policy which said trustees may have acquired under or by virtue of this deed or under or by virtue of any assignment of said policy executed to said trustees by me in order to effectuate the terms of this deed.” This is not a reservation of power to revoke the assignments, but the trustee, upon accepting the deeds containing this reservation, became obligated to release all claims under the assignments; and, by the terms of the deeds, the assignments and the deeds are one transaction to effectuate the plan. The appellants claim that this disposition of the policies and their proceeds is testamentary in character and the power of revocation suspended the completion of the transfer of the policies until the power could not be exercised because of death. The court, in determining whether there is here a transfer taxable under the
By reserving to himself the dividends, so called, from the policies, he did not reserve the use of the property transferred to himself. It was specifically provided, as is usual in respect to life insurance, that he should pay the premiums, and the dividends, so called, are simply a return to him of so much of the premium paid by him as was an overcharge (above the actual cost) made upon the estimated cost of carrying the insurance for him during the period for which premium was paid. The dividends, so called, are not dividends in the usual meaning of that word. They are not a return upon an investment or on property.
The right to substitute any other policies in place of either of those assigned was simply a provision of prudent foresight (in harmony with a right he had under, the terms of the policies) and does not indicate that the insured intended to retain the property in his control or change his original purpose.
We conclude, therefore, that the assured assigned and delivered these policies before death; that the transfers of the policies and their proceeds were not made in contemplation of death, nor made to take effect in possession or enjoyment upon death only, within the meaning of the statute; that the proceeds of the policies under the assignments thereof came rightfully into the hands of the Provident Life and Trust Company of Philadelphia; that they
The decision of the surrogate should, therefore, be affirmed, with costs.
Order of the surrogate unanimously affirmed, with costs.