IN RE PIERCE'S ESTATE.
COMPTROLLER OF STATE OF NEW YORK. PIERCE ET AL.
Appeal from Surrogate's Court, Cattaraugus County.
In the matter of the appraisal of the estate of William P. Pierce, deceased, under the acts relating to taxable transfers. From an order and decree of the Surrogate's Court affirming an order or decree taxing certain savings bank trust funds held by decedent, Bryon A. Pierce and another, as administrators, appeal. Reversed.
For prior report, see 60 Misc. 25, 112 N.Y.Supp. 594.
[116 N.Y.S. 817] William P. Pierce, a resident of the city of Olean, in Cattaraugus county, died intestate on the 14th day of April, 1908, leaving, him surviving, his wife and three children, all of full age. He made deposits of moneys in various savings banks in the state of Massachusetts. The deposits were in form as trustee for his wife and children; each account being in the name of William P. Pierce, as trustee for a particular person named. The accounts aggregated, at the time of his death, the sum of $21,722.03. They were opened by him long before his death, and the deposits were made from time to time, covering a period of many years. When a given account reached the interest-bearing limit in the bank, a similar account would be started in another bank, so that at his death there were fifteen accounts in all. The surrogate held that the funds were taxable under the transfer tax law, and the administrators appeal.
Transfer Tax Law (Laws 1896, p. 868, c. 908) art. 10, § 220, imposes a tax on the transfer of property when made in contemplation of the death of the transferor, or intended to take effect in possession or enjoyment at or after his death. A father deposited money in savings banks as trustee for his wife and children; each account being in his name as trustee for a particular person named. The passbooks were kept in a deposit box to which all the members of the family had access. The children were told that the funds set apart to them would belong to them at the age of 21 years, and the wife was told when the trust was made that her share of the funds belonged to her. On the marriage of one of the daughters, at which time all the children were 21 years old, she requested that her account be transferred to her, but was told by her father that the account was already hers, and that he could take care of it better where it was. Held, that the trusts became irrevocable before the death of the father, and that the funds were not subject to the tax. Order (1908) 112 N.Y.S. 594, 60 Misc. 25, 6 Mills, 476, reversed.
P. M. French, for appellants.
George M. Lundy, for respondent.
Argued before McLENNAN, P. J., and SPRING, WILLIAMS, KRUSE, and ROBSON, JJ.
We agree with the learned surrogate that if these savings bank deposits were mere tentative trusts, revocable by the deceased, the depositor, during his lifetime, they are taxable under the transfer tax law, although the trust became absolute and irrevocable upon the death of the depositor. The transfer tax law imposes a tax upon the transfer of property when made in contemplation of the death of the transferror, or intended to take effect in possession or enjoyment at or after his death. Tax Law (Laws 1896, p. 868, c. 908) art. 10, § 220.
It is contended on behalf of the appellants, however, that the trust became irrevocable and effective before the death of the deceased. The rule by which this question must be determined is stated in Matter of Totten, 179 N.Y. 112, 125, 71 N.E. 748, 752,70 L.R.A. 711, as follows:
" A deposit by one person of his own money, in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the passbook or notice to the beneficiary. In case the depositor dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption [116 N.Y.S. 818] arises that an absolute trust was created as to the balance on hand at the death of the depositor."
To determine whether the deceased completed the gifts in his lifetime, it will be necessary to examine a little further the facts, and in so doing it should be kept in mind that the unequivocal act or declaration required to complete the gift is such as delivery of the passbook or notice to the beneficiary.
The facts do not seem to be in dispute. It appears that, besides the widow, the deceased left a daughter, 31 years of age at the time of his death, and two sons, aged 28 and 24 years, respectively, at that time. The deceased had a safe deposit box in which were kept the passbooks and other securities belonging to him and the members of his family. The deceased and his sons had keys to the deposit box, but all the members of the family seem to have had access thereto, as occasion required. While the sons occasionally had the bank books, I think no such delivery of the passbooks was shown, as of itself, unaided by other acts and declarations of the deceased, would make the trust absolute and irrevocable. It appears, however, that the wife and children were kept informed of the deposits, and the deceased declared to them his purpose in opening the accounts and making the deposits. He often stated to the children that the funds set apart for them would belong to them at the age of 21 years, and told his wife that her funds were hers, at the time the trust was made.
The form of the accounts was not changed, and the moneys were all left in the banks. The deceased used none of the funds himself, nor did he pay any of the moneys over to his wife and children, and no request was ever made by them that he do so, except that shortly before his death the daughter requested that the accounts which had been made in trust for her be transferred to her name. That occurred about the time she was married. Up to that time the deceased and his wife and children had lived together as one family. Stress is laid upon this request, and the fact that the account was not transferred, as showing that the trust was then of a ...