operation, unless the legislative intent to that effect is clear.40

The owner of property cannot defeat the tax upon it at his death by any device securing to himself for life the income, profit, or enjoyment thereof; the transfer, in order to be without the inheritance tax law, must be such as passes the possession, the title, and the enjoyment of the property in the grantor's lifetime."1 Exemption from the tax depends upon the passing of the property, with all the attributes of ownership, independently of the death of the transferrer." The

before the enactment of the war revenue act of 1898 was held not taxable as working a transfer of property to take effect in possession or enjoyment after the death of the grantor or bargainer.

In People v. Kelley, 218 Ill. 509, 75 N. E. 1038, where a trust deed, not made in contemplation of death, took effect on delivery for the benefit of the beneficiaries, except that the grantor reserved to himself out of the income of the fund two thousand four hundred dollars annually for life, it was held that so much of the estate conveyed as was necessary to produce such income was subject to the inheritance tax.

In Galard v. Winans, 111 Md. 434, 74 Atl. 626, a conveyance by a father to trustees to hold during the lifetime of his daughter, interest and increase to be paid to her and she to have the privilege of disposing of the corpus by will, was held not taxable.

In Estate of Borup, 28 Misc. Rep. 474, 59 N. Y. Supp. 1097, a gift intended to take effect in possession or enjoyment at the death of the donor is held taxable, although the donee survived the donor only three days.

In Estate of Sharer, 36 Misc. Rep. 502, 73 N. Y. Supp. 1057, it is decided that where a testator placed unrecorded deeds executed by him, and securities assigned by him, in envelopes marked as the "property" of the transferees, and placed the envelopes in a bank, labeled with his name and that of the transferees, but continued to control the real estate and receive the income of the securities, the property was subject to the transfer tax.

In Estate of Anthony, 40 Misc. Rep. 497, 82 N. Y. Supp. 789, where a man had transferred to his wife's name profits invested with his firm for a number of years, the property was held subject to the inheritance tax on her death.

40 Matter of Hendricks, 1 Con. Sur. 301, 3 N. Y. Supp. 281.

41 People v. Estate of Moir, 207 Ill. 180, 99 Am. St. Rep. 205, 69 N. E. 905; Lamb's Estate v. Morrow, 140 Iowa, 89, 18 L. R. A., N. S., 226, 117 N. W. 1118.

42 State Street Trust Co. v. Stevens, 209 Mass. 373, 95 N. E. 851.

intention of the parties as to when the gift is to take effect is the test of taxability."3

The statutes imposing the tax relate to estates granted in deeds or conveyances which in some way make the estate granted dependent on the grantor's death; that is, to interests in property, the possession or enjoyment of which is postponed until the death of the grantor."

§ 122. Marriage Settlements.-Antenuptial agreements and marriage settlements have been held not within the purview of the statute imposing taxes on transfers made in contemplation of death or to take effect thereafter. One reason for this holding is that such transfers are founded upon a valuable consideration."

§ 123. Agreements to Make Will.-Where a man agreed to will his step-daughter all the property he might have at his death, or a portion of it, dependent on the existence of other children, which contract was not performed, and she sued the executor, trustee, and beneficiaries under the will actually made, to obtain a judgment declaring the agreement valid and directing the execution to her of all necessary releases and conveyance of the property, it was held in an action by her to have the estate declared exempt from transfer tax that the devolution of the property was under the will and hence subject to taxation."

43 Estate of Patterson, 127 N. Y. Supp. 284.

44 Estate of Bell, 150 Iowa, 725, 130 N. W. 798.

45 Matter of Baker, 83 App. Div. 530, 82 N. Y. Supp. 390, affirmed, 178 N. Y. 575, 70 N. E. 1094; Estate of Craig, 97 App. Div. 289, 89 N. Y. Supp. 971, affirmed, 181 N. Y. 551, 74 N. E. 1116.

46 Estate of Kidd, 188 N. Y. 274, 80 N. E. 924. In reaching this conclusion, the court adopts the reasoning of Matter of Dows, 167 N. Y. 227, 88 Am. St. Rep. 509, 52 L. R. A. 433, 60 N. E. 439.

§ 124. Transfers in Trust, in General. A trust deed by which the corpus of property is to go to the grantee at the death of the grantor, and the life use is reserved to the grantor, is a transfer of property intended to take effect at the death of the grantor and taxable as such. Thus where property is delivered by the owner to a trustee, under an instrument purporting to assign it to the trustee and his successors in trust to collect the income and apply the same to the grantor's use during life, and after his death to distribute the property among designated remaindermen, the transfer to the remaindermen is taxable as intended to take effect in possession or enjoyment after the death of the donor." And a transfer of corporate stock, upon the condition that the transferrer shall enjoy the dividends during his lifetime, is subject to the tax imposed upon transfers intended to take effect in possession or enjoyment at or after the death of the transferrer.48

Where a person places money with a trust company under agreement that the income is to be paid to a beneficiary as often as dividends become payable; that at the end of five years the settlor may withdraw the whole fund by giving the trustee six months' notice, and the trustee may pay off the trust fund by giving like notice to the settlor; that if no such notices are given, the fund is to remain for another period of five years, and the right of withdrawing or paying off may be exercised at intervals of five years from the date of the agreement; and that in case of the death of the settlor before the termination of the trust or any agreed expenses thereof the principal and unpaid income are to be paid to the beneficiary in sixty days after the expiration of the five year period—the gift

47 Estate of Green, 153 N. Y. 223, 47 N. E. 292.

48 Estate of Brandreth, 169 N. Y. 437, 58 L. R. A. 148, 62 N. E. 563.

is "made or intended to take effect in possession or enjoyment after the death of the grantor," and on his death the property is subject to the inheritance tax, to be assessed as of a time thirty days after the expiration of the period of five years referred to in the agreement.

49

A trust deed does not constitute an absolute gift of the property of the grantor during his life, so as to be exempt from the transfer tax as a gift intended to take effect after his death, where, after the delivery of the deed to the trustee, the grantor is not only entitled to revest himself with the ownership of the property, but continues able to enjoy it or to manage or dispose of it as he might previously have done, by reserving to himself the right to amend the trust by notice to the trustee, to withdraw or exchange any securities, and to control the acts of the trustee in disposing of the securities or making investments.50

A gift of securities under an agreement that the donor should, during his life, have "all or such part of the net income thereof as he might wish," the donee to have the possession and management of the securities, does not make the donee the absolute owner thereof, but only a holder in trust, until the death of the donor, to pay the income to him. The gift is therefore taxable as a transfer to take effect after the death of the donor.51 So a transfer of securities in trust for the relatives of the transferrer, with a life estate reserved to him and power of revocation, is in contemplation of death and subject to the inheritance tax."

49 New England Trust Co. v. Abbott, 205 Mass. 279, 137 Am. St. Rep. 437, 91 N. E. 379.

50 Estate of Bostwick, 160 N. Y. 489, 55 N. E. 210.

51 Estate of Cornell, 170 N. Y. 423, 63 N. E. 445.

52 Estate of Bullen, 143 Wis. 512, 139 Am. St. Rep. 1114, 128 N. W.

§ 125. Trusts.-The Reservation of a Power to Revoke the trust at any time during the life of the donor, however, does not necessarily mark the transfer as one intended to take effect after his death and impress it with taxable qualities." Nor, on the other hand, does the absence of power of revocation render the transfer exempt from taxation. The test by which. exemption is to be determined does not depend upon whether a power to revoke has or has not been reserved, but rather upon the passing of the property, with all the attributes of ownership, independently of the death of the transferrer.54 Thus where a trust deed was intended to convey the corpus of the estate to the beneficiary when he attained his twenty-first birthday, the transfer was held not taxable, notwithstanding the reservation in the grantor of a power of revocation; 55 but where a trust deed was not intended to pass the title of the corpus of the estate to the grantee until the grantor died, the latter reserving the power of revocation, the transfer was subjected to the inheritance tax.5 In both of these cases the income went to the beneficiary after the delivery of the deed and during the life of the grantor. The only substantial difference between them, it will be noticed, is that in the first it was intended that the corpus was to pass to the grantee upon his majority, while in the latter it was intended to pass on the death of the grantor. This difference resulted in a tax in the first case and no tax in the other. The New York court of appeals has intimated that it may have gone too far in affirming the first decision, certainly that it then

53 Estate of Masury, 28 App. Div. 580, 51 N. Y. Supp. 331, affirmed, 159 N. Y. 532, 53 N. E. 1127.

54 State Street Trust Co. v. Stevens, 209 Mass. 373, 95 N. E. 851. 55 Estate of Masury, 28 App. Div. 580, 51 N. Y. Supp. 331, affirmed, 159 N. Y. 532, 53 N. E. 1127.

56 Estate of Bostwick, 160 N. Y. 489, 55 N. E. 210.