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Provident Trust Co. v. Margetts

Decided: November 23, 1949.

PROVIDENT TRUST COMPANY OF PHILADELPHIA, EXECUTOR OF THE ESTATE OF LYDIA J. JENKINS, DECEASED, PLAINTIFF-APPELLANT,
v.
WALTER T. MARGETTS, JR., TREASURER, ACTING AS DIRECTOR, DIVISION OF TAXATION, DEPARTMENT OF THE TREASURY, STATE OF NEW JERSEY, DEFENDANT-RESPONDENT. IN THE MATTER OF THE TRANSFER INHERITANCE TAX ASSESSMENT OF THE ESTATE OF LYDIA J. JENKINS, DECEASED



Jacobs, Donges and Bigelow. The opinion of the court was delivered by Donges, J.A.D.

Donges

The Executor of the will of Lydia J. Jenkins appeals from a transfer inheritance tax levied upon two inter vivos trusts created by decedent approximately five years before her death.

The question here is whether the inter vivos gifts of property were made in contemplation of death, within the intendment of R.S. 54:34-1c and are consequently taxable transfers.

Testatrix died on June 5, 1947, at which time she was approximately 83 years of age. It was brought out at the hearing that, at the time of the transfers, March 12, 1942, the testatrix was in very good health, and, it was further testified to by her family physician, that he made professional calls on her not more than two or three times a year. The only condition which the testatrix had at the time was a certain amount of arteriosclerosis, which she had for a great number of years and which, apparently, did not bother her. The testimony displays the fact that she was quite active in women's clubs and bridge parties, and supported such organizations

as the Boy Scouts, the Y.M.C.A. and other boys' clubs in the Asbury Park area. She also played golf and drove her own large Cadillac car.

Testatrix had for many years contributed substantial financial support to her grandnephew, Robert C. Brandt, and her niece, Ada L. Challiss. The aid given to her niece averaged over a period of five years prior to the creation of the trust approximately $600.00 per year, and the aid given to Brandt over the same period averaged a little more than $2,300 per year.

On March 12, 1942, approximately five years before her death, the testatrix transferred certain of her assets to the Provident Trust Company, as trustee, thereby creating two irrevocable trusts for the benefit of her grandnephew and niece. The value of the property in the two trusts amounted to $97,036.80.

Mr. MacDougall, formerly associated with the Provident Trust Company, testified that the testatrix called on him and stated that she wished to continue the annual financial benefits she was bestowing on her grandnephew and niece, but found it difficult to do so because of increasing federal income taxes. She, therefore, wished to know if there were some irrevocable arrangements she could make, whereby she could continue the benefits she had been bestowing, and still not pay income taxes on those sums she was giving away. As a consequence of this conversation, the two irrevocable trusts in question were created.

On the same day that these trusts were established, the testatrix also shifted the bulk of her remaining assets into a revocable trust, whereby she received the income for life. Mr. MacDougall, former representative of the Provident Trust Company which for many years had handled the affairs of the testatrix and particularly an Agency Account, testified that this was done at his instigation, in order to avoid the extensive correspondence necessary to conduct her estate. He also explained to her that the establishment of this trust made it necessary for her to revise her will, which she did on the same day.

It is not contended that the revocable trust is not subject to transfer inheritance taxes. Our attention is directed only to the two irrevocable trusts, which the respondent claims were established in contemplation of death.

At the outset, it is pertinent to point out, that since the transfers under review were completed by the testatrix more than five years before her death, the statutory presumption, under R.S. 54:34-1c, does not arise. Therefore, the burden is upon the respondent to prove that the transfers were made in contemplation of death. Lee et al. v. Walsh , 141 N.J. Eq. 418 (Prerog. 1948); Squier v. ...


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