Shebell, Gruccio and Landau.
This is an appeal from a Tax Court decision determining the taxable portion of decedent-husband Ali Shayegan's (Ali) estate. Plaintiffs, Badri Shayegan (Badri) and Robin Winkler (Robin), the executors of the estate contend that certain assets legally titled in the name of decedent were held in trust for the benefit of his wife Badri and as such should not be included in decedent's taxable estate. Defendant, Director of the New Jersey Division of Taxation, contends that the assets in question were gifts from Badri to Ali and as such are includable in the taxable estate.
The facts leading to the present dispute span three decades and several thousand miles yet are largely uncontradicted. Both Badri and Ali were born in Iran. They were married in Iran in 1935 pursuant to an arrangement between Badri's father and Ali in accordance with Iranian custom. Ali immigrated to the United States in 1958 followed thereafter by Badri and their children. The subject of the present litigation is a portfolio of marketable securities valued at $407,059, purchased with monies received from Badri's family in Iran. The transfer of assets was made to Badri in her birth name and she subsequently transferred the assets to Ali. These funds were proceeds of assets left in Iran when the couple immigrated to the United States and a portion of an inheritance received by Badri's mother. The trial court found as a matter of fact that none of the funds in question constituted a belated dowry payment.
Badri's uncontradicted testimony disclosed that she never intended the funds transferred to Ali to be gifts to him but that in keeping with Iranian custom and tradition, Ali exercised exclusive management and control over all their accounts (checking, saving and investment). Badri testified that she was
content to allow Ali to make all the investment decisions. She referred, however, to the sums sent to her as "my own money" and testified that Ali acknowledged that the money invested belonged to her. He simply managed the assets with a stock broker who also testified that Ali acknowledged that the invested sums all came from Badri. Whenever Badri requested money, Ali gave it to her.
Defendant assessed a tax of $18,679.79 with respect to the securities portfolio. Plaintiffs paid the tax in full, together with interest, and sued in the Tax Court for recovery of the money paid. There plaintiffs asserted that where a husband makes an investment with his wife's funds a presumption of a resulting trust in wife's favor is created.
Defendant argues that the transfer of funds from the wife to her husband raises a presumption of an inter vivos gift. Therefore, those assets are properly included in the decedent's estate and the tax assessment was correct.
Judge Crabtree, whose opinion is reported at 9 N.J. Tax. 452 (1987), found in favor of plaintiffs and awarded judgment in the amount of the tax paid plus interest. We now affirm that decision substantially for the reasoning in the published opinion with the following observations.
The Tax Court correctly took note of the general rule "that a resulting trust will be declared in favor of the one paying the purchase price of property transferred to another unless it is shown that the one paying the price did not so intend." In Re Estate of Rauch, 167 N.J. Super. 497, 500-501 (App.Div.1979). The Tax Court also properly took into account that a contrary presumption of a gift or advancement arises when certain relationships, such as blood or marriage, exist between the payor and the transferee. The Tax Court next accurately indicated that "the presumption of a gift, where such a [blood or marriage] relationship is present, supersedes the presumption of a resulting trust and casts the burden of proof upon the
party attempting to establish the trust." Weisberg v. Koprowski, 17 N.J. 362, 372 (1955).
The Tax Court then considered whether purchases of property by one spouse in the name of the other spouse came within the "certain relationship" transactions which are presumed to result in gifts. The Tax Court correctly noted that "when a husband ...