Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Savage v. United States

decided: May 14, 1964.

JOSEPH F. SAVAGE, LESLEY ANDREW, AND DANIEL CREEM SAVAGE, AS EXECUTORS OF THE LAST WILL AND TESTAMENT OF EDNA SAVAGE BECKER, DECEASED, APPELLANTS,
v.
UNITED STATES OF AMERICA, APPELLEE.



Author: Hays

Before LUMBARD, Chief Judge, and FRIENDLY and HAYS, Circuit Judges.

HAYS, Circuit Judge.

The taxpayers, who are the executors of the estate of Edna Savage Becker, appeal from a determination by the district court that the proceeds of two insurance policies taken out by Mrs. Becker on the life of her husband, who predeceased her, are includible in her gross estate for purposes of the federal estate tax under Section 811(c)(1)(B) of the Internal Revenue Code of 1939.

The applicable portion of the statute reads as follows:

"Sec. 811. Gross estate

"The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside of the United States -

"(c) [as amended by Sec. 7(c) of the Technical Changes Act of 1949 (Act of October 25, 1949), ch. 720, 63 Stat. 891, and Sec. 207(a), Technical Changes Act of 1953, ch. 512, 67 Stat. 615] Transfers in contemplation of, or taking effect at, death

"(1) General rule. To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise -

"(B) under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death (i) the possession or enjoyment of, or the right to the income from, the property, or (ii) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom;

"Subparagraph (B) shall not apply to a transfer made before March 4, 1931 * * *."

We hold that the dispositive issue concerns the applicability of the proviso to subparagraph (B), excepting transfers made before March 4, 1931, and that, there having been no such transfer, the proceeds of the life insurance policies are properly includible in the decedent's gross estate.

In 1924 and 1925 the decedent took out two identical policies of insurance on the life of her husband in the total face amount of $125,000. The decedent paid the premiums as they fell due and reserved to herself, acting alone, the right to surrender the policies for cash, to borrow on them and to change the beneficiary and the choice of settlement option. However, the decedent did not change the designation of beneficiaries and the settlement option made when the policies were first issued.The policies provided that if Mrs. Becker survived her husband the company was to retain the proceeds and pay the interest on the amount so retained to her for life and then, in equal parts, for their lives to those of her children by her first husband who survived her, the several parts of the principal amount to be paid to the estate of each child at its death.

Decedent's first husband died on April 18, 1931. That event matured the policies and terminated absolutely the decedent's right to change the beneficiaries or the settlement option. Thereafter, the company paid interest on the principal amount to the decedent until her death in 1954, after which time the principal was held for the benefit of the children as provided in the decedent's designation.

The taxpayers-executors of the decedent's estate filed an estate tax return but did not include the insurance proceeds of $126,046.25, including accumulated dividends. The Commissioner of Internal Revenue determined that the proceeds constituted a part of the decedent's gross estate for purposes of the federal estate tax under Section 811(c) (1)(B) of the 1939 Code. After paying the resulting deficiency the taxpayers filed a timely claim for refund, which was disallowed. They then instituted this action. The judgment ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.