U.S. Supreme Court
Helvering v. Hallock, 309 U.S. 106 (1940)
Helvering v. Hallock
Argued December 13, 1939
Decided January 29, 1940
309 U.S. 106
1. Decedent, in his lifetime, created a trust providing that the income from the trust property should be paid to his wife during her lifetime, that, upon his death, if she survived him, the corpus of the trust should go to her or to other named beneficiaries, but that, upon her death, if he survived, the property should revert to himself. The wife survived. Held, that the value of the remainder interest chanroblesvirtualawlibrary
should be included in the decedent's gross estate under § 302(c) of the Revenue Act of 1926, as a transfer intended to take effect in possession or enjoyment at or after the grantor's death. Klein v. United States, 283 U. S. 231, followed; Helvering v. St. Louis Trust Co., 296 U. S. 39, and Becker v. St. Louis Trust Co., ibid., 296 U. S. 48, overruled. Pp. 309 U. S. 110-115.
2. The testator, by trust deed, established a fund in trust to pay the income to his wife during her life and to himself should he survive her, and, upon the death of the survivor, if the trust had not then been modified or revoked, to pay the principal to the settlor's estate. There was a further provision giving to the settlor and his wife jointly during their lives, and to either of them after the death of the other, power to modify, alter, or revoke the trust, which was not exercised. The wife survived the husband. Held, that the value of the interest which the husband had reserved to himself was properly included in his gross estate under § 302(c) of the Revenue Act of 1926. P. 309 U. S. 116.
3. Section 302(c) deals not with property technically passing at death, but with interests theretofore created. The taxable event is a transfer inter vivos. But the measure of the tax is the value of the transferred property at the time when death brings it into enjoyment. P. 309 U. S. 110.
4. The statute taxes not merely those interests which are deemed to pass at death according to refined technicalities of the law of property. It also taxes inter vivos transfers that are closely akin to testamentary dispositions. P. 309 U. S. 112.
5. The governing principle in the application of this legislation (§ 302(c), supra) is the intention of Congress to include in the gross estate inter vivos gifts which may be resorted to as a substitute for a will, in making dispositions of property operative at death. To effectuate this purpose, practical considerations applicable to chanroblesvirtualawlibrary
taxation prevail, and not the niceties of the art of conveyancing. P. 309 U. S. 114.
6. Stare decisis is a principle of policy, and not a mechanical formula of adherence to the latest decision, however recent and questionable, when such adherence involves collision with a prior doctrine more embracing in its scope, intrinsically sounder, and verified by experience. P. 309 U. S. 118.
7. In the case at bar, the decisions now relied upon by the taxpayers, but overruled by the court, were made after the making of the settlements, and after the death of the settlors, out of which the taxes accrued. P. 309 U. S. 119.
8. The right and duty of this Court to reexamine an untenable or undesirable construction placed by itself upon a revenue provision are not impeded by the failure of Congress and of the Treasury to take steps to avoid such construction through legislative amendment. P. 309 U. S. 119.
102 F.2d 1; 103 id. 834, reversed.
104 F.2d 1011 affirmed.
Certiorari, 308 U.S. 532, to review decisions of the Circuit Courts of Appeals involving federal estate taxes. In Nos. 110-112, the judgments below affirmed decisions of the Board of Tax Appeals, 34 B.T.A. 575, which had set aside deficiency assessments. chanroblesvirtualawlibrary