*263 Decisions will be entered under Rule 50.
The decedent in 1914 transferred property to himself and a bank as trustees, directing that the trust income be paid to himself for life, thereafter to his wife for life, if surviving, and then accumulated for the distribution of income and corpus equally to his surviving children as each should attain the age of twenty-one or, in case of a daughter, upon her marriage before twenty-one. The trustees were empowered to apply one-half a child's prospective share to the child's maintenance and education, but did not do so. The value of the trust property at decedent's death, held, includible in gross estate, since by the settlor's reservation of income for his life the transfer did not take effect in possession or enjoyment until his death. Sec. 811 (c), Internal Revenue Code; Commissioner v. Estate of Church, 335 U.S. 632">335 U.S. 632 followed.
*242 The Commissioner determined a deficiency of $ 53,129.91 in estate tax against the estate of Stockwell Reynolds Diaz-Albertini, petitioner in Docket No. 13988, and determined transferee liability for *243 the deficiency against the City Bank Farmers Trust Co., trustee, petitioner in Docket No. *265 13751. Petitioners assail the inclusion in gross estate of the value of property which decedent transferred to a trust in 1914, reserving to himself the income for life and naming his wife and children, if surviving, beneficiaries of subsequent income and corpus. They also contest the disallowance of certain expense deductions and the petitioner trustee denies transferee liability. Issues involving the deductions were settled by stipulation.
FINDINGS OF FACT.
These proceedings were submitted upon a stipulation and exhibits, which we incorporate by reference as findings of fact, and upon the expert testimony of a member of the English Bar which we find immaterial in view of the decision of the Supreme Court subsequently rendered in Commissioner v. Estate of Church, 335 U.S. 632">335 U.S. 632. From the stipulated facts it appears that:
Nora Reynolds Albertini Veitch (formerly Nora Reynolds Albertini), a resident of White Lodge, Surrey, England, is executrix of the estate of her deceased husband, Stockwell Reynolds Albertini, petitioner in Docket No. 13988; she filed an estate tax return for the estate with the collector of internal revenue for the district of *266 Florida. City Bank Farmers Trust Co. (formerly known as "The Farmers Loan and Trust Company" and hereinafter called the bank), a New York corporation with principal office in New York, New York, is trustee under a trust created by the decedent, and is petitioner in Docket No. 13751.
On April 17, 1914, decedent, as settlor, transferred to himself and the bank, as cotrustees, # 15,000 to hold, invest, and reinvest in stocks and securities, and to pay the income therefrom to him for his life and thereafter to his wife, Nora, if surviving and not divorced or separated from him, and thereafter to hold the trust funds and income in equal shares for all of his children by any marriage," who being sons shall attain twenty one or being daughters shall attain that age or marry." The trustees, with the settlor's consent during his lifetime, were also authorized, in their absolute discretion, to apply one-half of any child's "presumptive or vested share" to the child's maintenance, education, advancement, or benefit. In case there should be no child attaining a vested interest, the trust funds and income were to be paid to such person or persons as the settlor should appoint by will. Power *267 to appoint new trustees was vested in the settlor. In the trust instrument, which was executed in England, the settlor described himself as "of 42 Curzon Street in the County *244 of London," and reference was made to the bank's office at "26 Old Broad Street in the City of London." The instrument has since remained in full force and effect. The transfer in trust was not made in contemplation of death.
The decedent died testate on June 7, 1942, at the age of 52 years, an American citizen and a resident of Lee County, Florida. His will was there admitted to probate, and letters testamentary were issued to his surviving widow, petitioner herein, on May 18, 1944. Decedent was also survived by two sons, William Reynolds Albertini, born January 21, 1913, and Leander Gerald Albertini, born April 10, 1933. His widow was born June 3, 1894. During decedent's lifetime the trustees never exercised the power to apply one-half of a child's share in the trust to the child's maintenance, education, advancement, or benefit. Since decedent's death the petitioner bank has acted as sole trustee.
On the estate tax return, filed February 21, 1944, the executrix reported $ 48,503.32 as the value*268 of net estate at date of death, and on January 29, 1944, paid the tax of $ 6,670.73 shown due. She included nothing representing assets of the trust in gross estate, and the Commissioner determined that $ 70,219.35 on account thereof should be added to the value reported. At the time of decedent's death the trust property had a fair market value of $ 69,620. Since decedent's death his estate has been insolvent and unable to pay a determined deficiency of $ 53,129.91 in estate tax plus interest. It has paid or incurred attorney's fees of $ 3,500; executrix' commissions of $ 2,198; and decedent's 1941 income tax of $ 48,941.87 and his 1942 income tax of $ 67,992.80. These items, which total $ 122,632.67, are allowable deductions in computing net estate, but have not been heretofore allowed.
The Commissioner determined a deficiency of $ 53,129.91 in estate tax by including the trust property in gross estate and disallowing certain claimed deductions. He determined that petitioner bank, as trustee, was liable as transferee for the deficiency so determined.
OPINION.
These proceedings were instituted, tried and submitted prior to the decisions of the United States Supreme Court in*269 Commissioner v. Estate of Church, 335 U.S. 632">335 U.S. 632, and Estate of Spiegel v. Commissioner, 335 U.S. 701">335 U.S. 701, both rendered January 17, 1949. As a consequence, the parties' arguments reflect assumptions and approaches no longer tenable. Respondent defended his inclusion of the trust property in gross estate under section 811 (c), Internal Revenue Code, primarily by the contentions that a beneficiary other *245 than the settlor himself would have to survive the settlor to obtain possession or enjoyment of the transferred interest; that, as settlor, decedent had a possibility of reverter and could appoint by will other beneficiaries if those named should not survive and, in any event, could apply one-half of a beneficiary child's prospective share to the child's maintenance by joint action with the corporate trustee. Respondent also argued that decedent retained until death a power to "alter, amend, or revoke" the trust, within the meaning of section 811 (d) (2), by virtue of the last mentioned provision. He adverted to the settlor's retention of trust income for life as having "an important bearing in determining*270 whether the said transfer in trust was 'intended to take effect in possession or enjoyment at or after his death,'" but admitted that under Hassett v. Welch, 303 U.S. 303">303 U.S. 303, that provision alone was not determinative.
Petitioners argued that the possibility of reverter inherent in the settlor's power of appointment in case no beneficiary should survive was cut off when the elder son reached 21 years of age, and they introduced the expert testimony of a member of the English Bar to this effect under the theory that the trust was subject to the law of England. They argued, further, that decedent's power, in conjunction with the corporate trustee, to pay corpus to a child was limited by a definite external standard, i. e. the child's needs, and hence did not constitute a power to alter, amend, or revoke.
We do not deem it now necessary to consider these several contentions, since the Supreme Court, in Commissioner v. Estate of Church, supra, has expressly held that a trust agreement by which the settlor:
* * * reserved a life income in the trust property, was intended to take effect in possession or enjoyment at the*271 settlor's death and that the Commissioner therefore properly included the value of its corpus in the estate.
That decision, which expressly overruled May v. Heiner, 281 U.S. 238">281 U.S. 238, Hassett v. Welch, supra, and numerous other decisions, is here conclusive of the issue in respondent's favor, since the decedent settlor directed that the trust income be paid to him for life. We accordingly sustain the inclusion of the trust property in gross estate in the amount stipulated.
The petitioner bank assigns error in the determination against it of transferee liability for the deficiency in estate tax of the estate, but no reference to this assignment is made in its briefs. By section 827 (b), Internal Revenue Code, if the estate tax is not paid when due, the:
* * * transferee, trustee * * * who * * * has on the date of the decedent's death, property included in the gross estate under section 811 (b), *246 (c), (d), (e), (f) or (g), to the extent of the value, at the time of the decedent's death, of such property, shall be personally liable for such tax.
It is stipulated that the estate was insolvent and that the transferred*272 assets in the trustee's possession had a value of $ 69,620 at the time of decedent's death. We accordingly sustain the determined transferee liability for an amount not in excess of such value.
Other issues were settled by stipulation.
Decisions will be entered under Rule 50.