58 A.2d 135 | Pa. | 1947
This is an appeal by the Commonwealth of Pennsylvania from the decree of the court below striking from the inheritance tax appraisement of the assets of the estate of Robert B. Todd, deceased, the amount representing the present value of aninter vivos trust. Is there a transfer "intended to take effect in possession or enjoyment at or after death"1 where settlor of an inter vivos trust directs payment of the income therefrom to his wife for life, in the event she predeceases him to himself for life, and remainder to designated charities, reserving the right of complete revocation although settlor predeceases his wife and the power of revocation has not been exercised?
Robert B. Todd, on April 1, 1932, made and executed an agreement with the Conestoga National Bank of Lancaster, named trustee therein, pursuant to which he transferred to trustee $20,000, to be held in trust, the *532 income therefrom to be paid to Mary Ellen Todd, wife of Robert B. Todd, during her lifetime. If settlor survived his wife, the trust was to continue and he was to receive the net income therefrom for his lifetime. Upon the death of the survivor, the principal of the trust was to be held for the benefit of designated charities.
Section 5 of the deed of trust provided: "The settlor reserves the right to revoke this trust at any time during his life, by written notice to the trustee, and the receipt of the settlor for any moneys or property surrendered to him pursuant to such notice shall be a full and complete release of the trustee thereof against all persons." Settlor upon several occasions added to the trust fund with the result that at the date of his decease his capital contributions thereto totaled $59,535.97, having an admitted value at that date of $60,063.25.
Settlor and trustee on June 20, 1939, entered into a supplemental trust agreement whereby the remainder gift to one of the charities was revoked so that the entire income of the trust would be equally divided between two remaining charities. On December 24, 1943, a further modification was made with reference only to administration of the fund and not in any way affecting the disposition of the estate.
Robert B. Todd died November 16, 1915, survived by Mary Ellen Todd, widow. On October 4, 1946, the transfer inheritance tax appraisement was filed in the Office of the Register of Wills of Lancaster County, based on the assets in the hands of trustee under the inter vivos deed of trust. The Conestoga National Bank of Lancaster and Mary Ellen Todd, as executors of the estate of Robert B. Todd, deceased, and as trustees and individually as beneficiaries respectively under both the deed of trust and decedent's will, the Lancaster General Hospital of Lancaster and the Evangelical Lutheran Church of the Holy Trinity of Lancaster, residuary beneficiaries under the deed of trust, appealed to the orphans' court to have the above appraisement stricken from the record *533
averring that the fund was not subject to transfer inheritance tax. The court below, relying upon Dolan's Estate,
The Transfer Inheritance Tax Act, supra, provides: "A tax shall be . . . imposed upon the transfer of any property, real or personal, or of any interest therein or income therefrom in trust or otherwise, to persons or corporations in the following cases: . . . (c) When the transfer is of property 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." In Lines's Estate,
Robert B. Todd, settlor, did not completely divest himself of all "interest" in the property. Instead, he reserved therein a vested right to the income for life, subject to being divested by his decease in the lifetime of his wife whose life interest was vested in possession. As executed, the deed provided for the income to the wife for life, remainder to settlor for his life, remainder to designated charities. His death was, therefore, contemplated to be an event which vested possession and enjoyment of the ultimate remainder interest. The court below was in error in directing that the appraisement be stricken from the record.
The decree of the court below is reversed, the appraisement for inheritance tax purposes is hereby reinstated; costs to be paid by trustee.