on the execution of her will ten days thereafter.
All of the evidence at the trial clearly showed that she was in good health at the time of the setting up of the trust indenture, that she was an extremely active and busy woman and that the motive for setting up the trust was to relieve her of the management of the funds and to put them beyond the reach of unscrupulous persons. There was also testimony that the trust had been thought of and drafts thereof made several weeks prior to the death of Colonel Blunt.
We do not believe thought of death was a contributing motive prompting the disposition of the property.
Section 302(c) of the Revenue Act of 1924
is the ground on which the government bases its contention that the trust fund in question is subject to the federal estate tax. The material provisions of this section are as follows:
Section 302: "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.
* * *
"(c) 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 at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, * * *".
At the time of Mrs. Blunt's death, July 3, 1934, Section 302(c) of the Revenue Act then in effect subjected to tax trusts created by a decedent wherein the income was reserved by decedent for his life, but the United States Supreme Court in Hassett v. Welch
has decided that the amendment subjecting such trusts to tax was not retroactive and did not affect trusts created prior to the effective date of said amendment.
The transfer in question was intended to take effect in possession or enjoyment at or after death since it could not be determined until decedent's death whether any of the corpus of the estate would pass to the persons named in the instrument. It is clear from the provision providing that "should in their opinion the necessity arise, the Trustees are hereby empowered to use such portion of the principal of the trust fund as may seem proper for the support, care or benefit of the party of the first part"; that decedent intended that some or possibly all of the principal should be used for her care and support, if needed for that purpose.
Plaintiff argues that one of the trustees, Albert C. Blunt, Jr., had an interest adverse to the trustor implying that he would have been influenced by selfish motives in preventing decedent from benefiting under any circumstances by this provision in the trust instrument. Our view is that the decedent chose him as one of the trustees so that her interest and personal welfare could be more carefully protected, and that he would have hastened to her aid, if need be, and demanded that the corporate co-trustee join him in using the corpus to provide for the care and comfort she needed or desired.
The principle presented by the second question herein has been before the Supreme Court of the United States in Klein v. United States
and the principle of said case was reaffirmed and extended to cover situations where there was merely a possibility of reverter in Helvering v. Hallock.
Those two cases are binding upon us and control.
We are obliged to hold that the transfer was intended to take effect in possession or enjoyment at or after death within the meaning of Section 302(c) of the Revenue Act of 1924.
The trust was not created "in contemplation of death" within the meaning of Section 302(c) of the Revenue Act of 1924.
The transfer in trust was intended to take effect in possession or enjoyment at or after death within the meaning of Section 302(c) of the Revenue Act of 1924.