Estates and Trusts Commons^™

Federal Taxation Of The Assignment Of Life Insurance, Douglas A. Kahn, Lawrence W. Waggoner

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The most litigated estate tax issue concerning life insurance is whether the proceeds should be included in the insured's gross estate. This question usually is governed by section 2042 of the Internal Revenue Code of 1954, the estate tax provision directed specifically at life insurance. While the Tax Reform Act of 1976 wrought enormous changes in many areas of estate taxation, Congress did not change section 2042. Thus the several unresolved questions concerning the interpretation of that section remain unsettled. But the question of the includability of life insurance proceeds in the gross estate of the insured is not always …

Transactions Subject To Gift Tax, Douglas A. Kahn, Earl M. Colson

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The gift tax is imposed on the "transfer of property by gift." The term gift is not expressly defined either in the Code or in the Treasury Regulations. However, section 2512(b), dealing with the valuation of gifts, states that "where property is transferred for less than an adequate and full consideration in money or money's worth," the difference between the value of the property transferred and the consideration received constitutes a gift. Thus, for gift tax purposes, the determination of whether a gift was made does not turn so much on the intent of the transferor as it does on …

A Guide To The Estate And Gift Tax Amendments Of 1970, Douglas A. Kahn

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The Excise, Estate, and Gift Tax Adjustment Act of 1970 [Pub. L. No. 91-614 (Dec. 31, 1970) made a number of amendments to the federal estate and gift tax laws. The estate tax laws were amended to shorten the period of time for filing estate tax returns and for the alternate valuation date and for several related items. In addition, for income tax purposes, the holding period of property that was included in a decedent's gross estate and that was acquired from the decedent was altered; and fiduciaries were granted additional means of obtaining a discharge of their personal liability …

Mandatory Buy-Out Agreements For Stock Of Closely Held Corporations, Douglas A. Kahn

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A buy-out of a shareholder's stock is a sale of his stock holdings in a specific corporation pursuatnt to a pre-existing contract. In recent years such arrangements have, deservedly, become an increasingly popular planning device for shareholders in closely held corporations; they make it possible to limit the class of potential shareholders, provide liquidity for the estate of a deceased shareholder, and establish a value for stock which has no active market. There are two popular categories of buy-out plans. If the prospective purchaser of a decedent's shares is the corporation that issued them, the plan is called an "entity …

Federal Estate Tax Burden Borne By A Dissenting Widow, Douglas A. Kahn

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Renunciation of her deceased husband's will entitles a widow to a specified percentage of the husband's net estate (or a dower interest) in lieu of any benefits she would otherwise have received under the will. The size of the dissenting widow's share differs among the several states, but the normal range is from one third to one half of her husband's net estate. In some jurisdictions the widow's share is determined, in whole or in part, according to the portion to which she would be entitled if her husband had died intestate, but in these jurisdictions the widow's share generally …

The Russian Reinsurance Case, Edwin D. Dickinson

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Professor Dickinson's second commentary on Russian Reinsurance Company v. Stoddard and Bankers Trust Company: "The facts in the Russian Reinsurance Company case were without precedent. The Reinsurance Company had been incorporated in Russia in 1899 under a special statute constituting its charter and by-laws.... In 1917 the revolutionary Soviet Government was established in Russia and seven of the eight persons constituting the company's board of directors was driven into exile. In 1918 Soviet decrees nationalized the company, confiscated its property, and apparently terminated its corporate existence. Nevertheless, the exiled directors held meetings in Paris and continued to direct the …

Perpetuity Statutes, Edwin C. Goddard

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THE common law of perpetuities is one of the most interesting examples of almost pure judicial legislation. De Donis, The Statutes of Uses and of Wills, but gave wider scope to the development by the courts of rules of law to thwart the attempt of the great landowners to tie up their landed estates in their families in perpetuity. One body of rules to this end limited restraints upon alienation, another the creation of future interests vesting at too remote a period. Restriction of restraints upon alienation, and the rule against perpetuities, these two were developed for the same end, …

Escheat - How State Acquires Title, Edwin C. Goddard

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Escheat is of feudal origin, and properly applied only to land which on failure of heirs or for certain other reasons, "fell in" to the lord under whom it had been held. Personal property without an owner, as bona vacantia, became the property of the crown. In re Bond [1901] 1 Ch. 15. In the United States escheat is used more broadly, but usually arises when the owner of property dies intestate without heirs. Our alienage laws have generally removed disabilities of aliens to take, but in some jurisdictions there may still be escheat because of alienage, see 5 MICH. …

Mutual Wills, Edwin C. Goddard

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SO LATE as 1822 Sir John Nicholl is reported to have said in Hobson v. Blackburn, that a mutual, or conjoint will is an instrument "unknown to the testamentary law of this country; or, in other words, that it is upknown, as a will, to the law of this country at all. It may, for aught that I know, be valid as a compact." In Darlington v. "Pulteney, Lord MANSFIELD said, "there cannot be a joint will." Following these distinguished and learned judges, Jarman and Williams in their classical treatises accepted the statement of Sir John, and some early American …

Deeds To Take Effect After Death Of Grantor, Ralph W. Aigler

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That Instruments in form of wills may be effective as deeds of conveyance is clear. If a present interest is passed and execution is complete (which includes delivery), the instrument must take effect as a deed. On the other hand, If no interest is to vest until or after death of the maker and there has been no complete execution as a deed, the instrument, if operative at all, must take effect as a will. Difficulties arise when there is a fully executed deed, which, however, is to be postponed in its complete operation until the death of the grantor.

The Writing Required To Establish An Express Trust Of Land, Edgar N. Durfee

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It has frequently been said that the Seventh Section of the Statute of Frauds, concerning Trusts of land, requires a writing containing "all the terms of the trust." Forster v. Hale, 3 Ves. 707; Smith v. Matthews, 3 DeG., F. & J. 139; Loring v. Palmer, 118 U. S. 321; Gaylord v. Lafayette, 115 Ind. 423; McClellan v. McClellan, 65 Me. 500; Blodgett v. Hildreth, 103 Mass. 484; York v. Perrine, 71 Mich. 567; Newkirk v. Place, 47 N. J. Eq. 477; Steere v. Steere, 5 Johns. Ch. 1; Cook v. Barr, 44 N. Y. 156; Dillaye v. Greenough, 45 …

Deeds To Take Effect After Death Of Grantor, Ralph W. Aigler

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That Instruments in form of wills may be effective as deeds of conveyance is clear. If a present interest is passed and execution is complete (which includes delivery), the instrument must take effect as a deed. On the other hand, If no interest is to vest until or after death of the maker and there has been no complete execution as a deed, the instrument, if operative at all, must take effect as a will. Difficulties arise when there is a fully executed deed, which, however, is to be postponed in its complete operation until the death of the grantor.

Wills - Revocation By Judicial Legislation, Edwin C. Goddard

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Wills and their revocation as we know them are peculiarly the result of the actions and reactions of our common and statute law. We are sufficiently familiar with statutes, declaratory of the common law, in derogation thereof, and creating entirely new principles of law. We also know law the result of no legislative act. Whatever may or may not be admitted about court-made law, we see the undoubted fact that the great body of our law is the outgrowth of decisions applying to new conditions principles of law found in analogous cases, whereby the common law is able to adapt …

The Statute Of Uses And Active Trusts, Edgar N. Durfee

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To explain the survival of uses, alias trusts, after the Statute of Uses, one is probably justified in assuming a sympathetic attitude toward this Equitable institution on the part of the Common Law Judges. Maitland, Equity, 29. But, however predisposed the Judges might be, they would have to satisfy themselves, perhaps others as well, that they were interpreting rather than nullifying the Statute. Only such uses could be saved as could be "distinguished." The case of the use raised upon a chattel interest is clear enough, as it was without the letter, and fairly without the mischief, of the Statute. …

Contingent Gifts And Incorporation By Reference, John R. Rood

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The courts have had great difficulty in reconciling certain contingent gifts with the statutes requiring wills to be in writing duly executed. At first glance there appears no inconsistency, but in practice troubles accumulate.

Substitutional Gifts To Classes, John R. Rood

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In some recent cases we have fresh reminder of the futility of Sir William Grant's distinction between original and substitutional gifts, a rule over which courts have quarreled and disagreed ever since it was promulgated, and which never was applied to the exclusion of anyone without disappointing the wish of the testator. In speaking of this rule in Re Hickey, [1917], 1 Ch. D. 601, 604, Neville, J., says: "The alleged principle seems to be that the meaning of the word 'substitute' involves the idea of replacing one thing by another. One cannot 'substitute' something for nothing. The proposition appears …

The Disposition To Be Made Of Property The Subject Of A Power If The Power Is Not Exercised, John R. Rood

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The object sought in this article is to collect and classify the cases in which the courts have passed on the question as to what shall be done with property over which a power of appointment has been given; when it finally turns out for some reason that the power has not been exercised. It is not the object to establish any particular thesis, but rather to ascertain how the adjudicated cases stand.

What Words Create A Power?, John R. Rood

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As the right to sell may exist either as a result of ownership, or by virtue of a power without or independent of ownership, it is sometimes a question whether words indicating a right to sell, contained in an instrument granting an estate, are intended to give a power, or are merely descriptive of the rights incident to the estate given. When property is devised without any designation of the estate given, and the devise is followed by words indicating that the devisee is to have the right of absolute disposal in fee, or to sell in fee, it has …

Corporations And Express Trusts As Business Organizations, Horace Lafayette Wilgus

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PRESIDENT BUTLER of Columbia University is reported to have said in an address before the New York Chamber of Commerce in 1911, that "the limited liability corporation is the greatest single discovery of modem times, whether you judge it by its social, by its ethical, by its industrial, or, in the long run--after we understand it and know how to use it,--by its political, effects." 1

How To Beat The Rule Against Perpetuities, John R. Rood

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Many people seem to think that the lawyer's problem is not so much to know what the law is as to know how to get all they want while obeying the law to the letter. In the case of perpetuities the history of nearly a thousand years of our law shows an almost unbroken series of disastrous failures of the best-laid schemes to violate the public policy of freedom of alienation.

Unenforceable Trusts And The Rule Against Perpetuities, George L. Clark

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Bequests upon trust to use the income thereof each year in keeping a monument or grave in repair, or in saying masses,8 or in having a brass band to play at the testator's grave each year on the anniversary of the testator's death9 have been held invalid, and the reason given is that the gift is a "perpetuity"1 or is in "violation of the rule against perpetuities."11 What do the courts mean by calling such a gift a "perpetuity?" And in what way, if at all, could the bequest be so changed as to avoid the "rule against perpetuities" and …

The Public Policy Of Contracts To Will Future Acquired Property, Joseph H. Drake

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The general subject of wills upon consideration seems to have given courts and jurists a good deal of trouble, not only in England and America, but also in the continental countries. The Code Napoleon appears in terms actually to prohibit the making of reciprocal or mutual wills in the same instrument.

An Inroad Upon Fiduciary Integrity, Edson R. Sunderland

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It is a principle universally recognized throughout our system of law, that no person shall be permitted to occupy a position of trust and confidence who at the same time is clearly subject to influences hostile to a faithful performance of his trust. There is a rule as old as Christianity, and it has been incorporated into our law from the earliest times, that "no man shall serve two masters; for either he will hate the one and love the other, or he will hold to the one and despise the other." Fiduciary relations can rest upon no foundation but …

The Cy-Pres Doctrine, Harry B. Hutchins

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The CY-Pres Doctrine.-The court of chancery of New Jersey in the recent case of Brow et al. v. Condit et al. (Sept. 30, 1905), 61 Atl. Rep. 1055, refused to apply this doctrine under the following circumstances: The will of one Susan M. Corson, bearing date July 7, 1897, disposed of her residuary estate "to the Hospital Fund for Sick Seamen at Navy Yard, Brooklyn, New York, care of Mr. John M. Wood, chaplain." It appears that neither at the time of the making of the will nor at any time thereafter was there a fund in existence at or …

Testamentary Promises To Pay, Nathan Abbott

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The New York Law Journal for May 23, 1892, contains a suggestive editorial headed "A Will or Not a Will," in which the writer says "Interesting questions are constantly arising in the classification of instruments which, although expressing wishes or intentions to be carried out after death, are open to criticism on the score of testamentary execution." As is intimated by the writer, the difficulty of placing an instrument in either the class of contracts or wills is considerably diminished if the statutory provisions as to execution of wills are elaborate. Where holographic wills are allowed, or wills of personal …

David Maynard Et Al V. Fractional School District, & C., Thomas M. Cooley

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"A bequest to the members composing the School District by name, and to their successors in office, of moneys to be expended in the purchase of books for a district library -- thy being the officers designated by law to preform similar duties for the district -- is in effect a bequest to the district."

Lucy M. Maynard by her last will directed the residue of her estate be sold and the monies be placed at the disposal of the District Board of the Fractional School District in Milan and York, Michigan, and used for library supplies. "The validity of …