*632 Decedent in 1929 created an irrevocable trust which provided that the income was to be paid to the decedent's wife for life and on her death to the decedent for his life. On the death of the survivor of them the corpus was to be distributed in equal shares to decedent's brother and sister or their issue per stirpes. If the brother and sister predeceased without issue the decedent and his wife, the corpus was to be distributed to the decedent's next of kin in accordance with the intestate laws of New York State. Held, that as to the remainder interests the creation of the trust was a transfer intended to take effect in possession or enjoyment at or after death. Helvering v. Hallock,309 U.S. 106">309 U.S. 106; Estate of Mary H. Hughes,44 B.T.A. 1196">44 B.T.A. 1196.
*909 Respondent determined a deficiency in estate tax against petitioner in the amount of $25,434.16, of which $2,083.61 has been assessed pursuant to waiver, leaving $23,350.55 in dispute. Three issues*633 were presented for out consideration. As stated by the parties, the first and second issues are whether the transfer in question was a transfer in contemplation of death or intended to take effect in possession or enjoyment at or after the death of the decedent within the meaning of section 302(c) of the Revenue Act of 1926, as amended by section 803(a) of the Revenue Act of 1932. The third issue involved the problem whether respondent erred in denying petitioner a credit for Ohio inheritance tax in the amount of $2,745.28. In view of the stipulation between the parties that petitioner paid such a tax in the amount of $2,617.72, this latter issue is no longer before us.
FINDINGS OF FACT.
Part of the facts have been stipulated by the parties. As so stipulated we adopt them as findings of fact. In so far as material to the issues the stipulation provided substantially as follows:
*910 Harry A. Worcester, hereinafter referred to as the decedent, was born November 18, 1862. He died September 18, 1938, at the age of 75 years and 10 months. The cause of death was coronary heart disease, with coronary occlusion and vascular disease generalized. At the date of death*634 decedent was a retired official of the New York Central Railroad. In 1932, at 70 years of age, he was retired by that railroad with a pension, but continued as president of the Cincinnati Union Terminal Co. until April 1933.
At the date of death and from a time prior to July 10, 1929, decedent was a resident of the Jefferson School District, Columbia Township, Hamilton County, Ohio.
Under date of July 10, 1929, decedent, then 66 years of age, executed a certain trust instrument and on July 12, 1929, United States Trust Co. of New York, a banking corporation with trust powers organized and existing under the laws of the State of New York, executed the same as trustee.
Under date of November 7, 1939, an estate tax return was filed with the collector of internal revenue for the first district of Ohio and the petitioner elected to have the property included in the gross estate of the decedent valued as of the optional dates in accordance with the method authorized by subdivision (j) of section 302 of the Revenue Act of 1926 as amended by section 202(a) of the Revenue Act of 1935.
Decedent and his wife each contributed certain securities to the trust. After the life estate*635 of decedent's wife the remainder interest in the securities contributed to or derived from securities contributed to the trust by decedent had a value of $133,123.14, such value having been computed as of the optional valuation date.
On July 10, 1929, the date decedent executed the trust instrument, the individuals named below were relatives of decedent and their respective ages on that date were:
| Age | |||
| Relationship | on July | Date | |
| Name | to decedent | 10, 1929 | of birth |
| Elizabeth Whiting Worcester | Wife | 62 | Aug. 12, 1866 |
| Wilfred J. Worcester | Brother | 64 | July 28, 1864 |
| Dean K. Worcester | Nephew | ||
| (son of Wilfred J. Worcester) | 31 | May 22, 1898 | |
| Winifred W. Stevenson | Niece (daughter of Wilfred J. Worcester) | 29 | Sept. 11, 1899 |
| Dean K. Worcester, Jr | Grandnephew (son of Dean K. Worcester) | 6 | Nov. 10, 1922 |
| Shirley Worcester | Grandniece (daughter of Dean K. Worcester). | 3 | Nov. 10, 1925 |
| Susan Worcester | Grandniece (daughter of Dean K. Worcester). | 1 | June 8, 1928 |
| Eric van C. Stevenson | Grandnephew (son of Winifred W. Stevenson). | 3 | June 27, 1926 |
| Margaret D. W. Williams | |||
| (died Mar. 30, 1941). | Sister | 56 | Aug. 12, 1872 |
| Mary Williams Dick | Niece (daughter of Margaret D. W. Williams). | 21 | May 18, 1908 |
| Margaret Williams Fairbrother | Niece (daughter of Margaret D. W. Williams). | 19 | Mar. 30, 1910 |
*636 *911 On September 18, 1938, the date of decedent's death, the following individuals survived decedent, and their respective ages on that date were:
| Age on | |||
| Name | Relationship to decedent | Sept. 18, 1938 | Date of birth |
| Elizabeth Whiting Worcester | Wife | 72 | Aug. 12, 1866 |
| Wilfred J. Worcester | Brother | 74 | July 28, 1864 |
| Dean K. Worcester | Nephew (son of Wilfred J. Worcester) | 40 | May 22, 1898 |
| Winifred W. Stevenson | Niece (daughter of Wilfred J. Worcester) | 39 | Sept. 11, 1899 |
| Dean K. Worcester, Jr | Grandnephew (son of Dean K. Worcester) | 15 | Nov. 10, 1922 |
| Shirley Worcester | Grandniece (daughter of Dean K. Worcester). | 12 | Nov. 10, 1925 |
| Susan Worcester | Grandniece (daughter of Dean K. Worcester). | 10 | June 8, 1928 |
| Lucy L. Worcester | Grandniece (daughter of Dean K. Worcester). | 8 | May 28, 1930 |
| Eric van C. Stevenson | Grandnephew (son of Winifred W. Stevenson). | 12 | June 27, 1926 |
| James H. Stevenson | Grandnephew (son of Winifred W. Stevenson). | 9 | July 11, 1929 |
| Margaret D. W. Williams | Sister | 66 | Aug. 12, 1872 |
| Mary Williams Dick | Niece (daughter of Margaret D. W. Williams). | 30 | May 18, 1908 |
| Margaret Williams Fairbrother | Niece (daughter of Margaret D. W. Williams). | 28 | Mar. 30, 1910 |
*637 Jeremy Dick, a son of Mary Williams Dick, was born on September 2, 1939, after decedent's death.
Petitioner has paid to the treasurer of Hamilton County, Ohio, on account of the Ohio inheritance tax upon the succession to the property listed in the estate tax return, the sum of $2,617.72.
The pertinent part of the trust instrument, incorporated by reference in the stipulation, provided as follows:
NOW, THEREFORE, In consideration of the premises, the party of the first part by these presents does grant and transfer, to the party of the second part, its successors and assigns, the following property, namely:
[There followed a list of stocks.]
TO HAVE AND TO HOLD said property to the party of the second part, its successors and assigns, in trust, however, for the following uses and purposes, namely: TO hold, manage, invest and reinvest the same; to collect and receive the interest, income and profits thereof, and after deducting all proper charges and expenses, to pay the net income therefrom to ELIZABETH W. WORCESTER, wife of the party of the first part, during her natural life; and, upon her death, in case the party of the first part be then living, to pay the net income*638 therefrom to the party of the first part during his life, or if he be then dead, or if living, then upon his death, to divide the said trust estate in equal shares between WILFRED J. WORCESTER, a brother, and MARGARET D. W. WILLIAMS, a sister of the party of the first part, if living, and the issue of either of them who may be dead, per stirpes, or in case they both be dead and there is no such issue, then to the next of kin of the party of the first part, in the manner and proportions directed by the laws of the State of New York for the distribution of the personal estates of persons dying intestate.
In addition, we also find the following facts:
The tax rates per thousand dollars of valuation in the Jefferson School District, Columbia Township, Hamilton County, Ohio, for *912 the years indicated were as follows: 1927, $28.38; 1928, $19.90; and 1929, $20.50.
The trust was created prior to the 1929 amendment to the Ohio Constitution. At the time of the creation of the trust the Ohio Constitution required uniform taxation of all property, both real and personal, with the exception of certain exempt property.
Substantially all the securities listed in the trust instrument*639 were stocks of nonexempt corporations.
At the time of the creation of the trust the decedent was vice president of the New York Central System, in charge of the Cleveland, Cincinnati & Chicago Railroad, commonly known as the Big Four Division. In this connection it was his duty to supervise purchasing, traffic, accounting, and the entire operation of the Big Four Division.
At the same time the decedent was also president and chairman of the board of directors of Cincinnati Union Terminal Co., which was engaged in constructing the Cincinnati Union Terminal, a $41,000,000 project. In this capacity he was obliged to hold numerous meetings and conferences with the person in charge of the construction of the terminal and with officials of the seven railroads involved.
He was, in addition, president of the Cincinnati Depot & Railway Co. and a director of several other railroad companies.
The decedent's duties required him to make many extensive business trips. When not out of town, he attended his office every day, generally leaving home at 8 a.m.
He also took part in numerous social activities, many of them occasioned by his business. Because he lived in a rural section*640 he would quite often stay at his office until time to go to the social function and then dress at the office.
The decedent was in good health. For his vacation he enjoyed going to a hunting lodge in Canada, which he reached by traveling the last few miles by "buckboard." He and his wife went there by themselves for 30 days in 1931 or 1932 and "roughed it." After he created the trust he also made several trips abroad, took winter trips to the South, and spent a great deal of time in Maine, where he lived an outdoor life. In 1937 he made a trip to Maine and in 1938 one to Jamaica. In 1938 he went to Olympia, Washington, and in less then 30 days motored approximately 2,500 miles in mountainous country.
For recreation before retirement in 1932 he walked a great deal and played golf. After his retirement he worked in the flowers on his farm and on an average of once a week would make long motor trips, often driving himself.
After retirement he retained his membership in his clubs. The day before his death he attended a meeting of the Optimists Club, which he attended regularly when in town. In the evening of the *913 same day he entertained a dinner guest at his home. *641 He died before four o'clock the next morning.
The decedent's motives in creating the trust were as follows: (1) To avoid Ohio property taxes by placing the property in question in a trust with a New York bank as trustee; (2) to place the decedent in lower surtax brackets for Federal income tax purposes; (3) to enable the decedent to avoid the details involved in taking care of his investments after his retirement, which retirement was required at 70 years of age under rule of the New York Central Railroad System.
The creation of the trust by the decedent on July 10, 1929, was not a transfer made in contemplation of death.
OPINION.
VAN FOSSAN: Respondent included the remainder value of securities contributed by the decedent to the corpus of the trust, hereinafter referred to as the corpus of the trust, as a part of the decedent's gross estate under section 302(c) of the Revenue Act of 1926, as amended. Respondent asserts that this amount was so includible because it was a transfer both in contemplation of death and intended to take effect in possession or enjoyment at or after death. Thus two questions are presented: First, was the transfer made in contemplation of death? *642 and, second, did the decedent intend the transfer to take effect in possession or enjoyment at or after his death?
The first question is one of fact, the answer to which is to be gathered by "carefully scrutinizing the circumstances * * * to detect the dominant motive of the donor in the light of his bodily and mental condition." . The test is one of motive. If the thought of death was the impelling cause of the transfer in question, it was in contemplation of death and, therefore, includible in decedent's gross estate. The burden of proving that death was not the motive causing the transfer is on petitioner.
After carefully weighing the facts and circumstances, together with the inferences to be drawn therefrom, we have concluded in our findings of fact that the transfer in question was not made in contemplation of death. It was made at a time when the decedent was extremely active in his business affairs as a vice president of the New York Central System and president of the Cincinnati Union Terminal Co., which was at that time constructing a $41,000,000 railroad terminal in Cincinnati. The testimony indicated that*643 he was in good health, traveling extensively on business and pleasure trips and on occasions going with his wife to this hunting lodge in Canada beyond the reach of automobiles, where he fished and "roughed it." He was also active in social life in Cincinnati, going out evenings as often as three or four nights a week. After retirement from business he often went on long motor *914 trips, driving the car himself. We picture the decedent at the time of the creation of the trust as a vigorous man who, although 66 years of age, still retained a zest for living so great as to push thoughts of death into the background.
It is our opinion that motives associated with life, not with death, caused decedent to make the transfer. By creating the trust he avoided heavy personal property taxes imposed by the State of Ohio and, in addition, reduced his Federal income taxes by dividing his income between himself and his wife, thereby reducing his surtaxes. The saving of property and income taxes as a motive for making a transfer is a factor to be considered in determining whether the presumption that a transfer was made in contemplation of death has been overcome. *644 ; affd., ; affd., ; . We have also found that on retirement the decedent would no longer have had available the secretary who handled his personal matters while with the New York Central Railroad. Thus, by creating the trust he anticipated avoiding the details involved in taking care of his investments after retirement, a purpose associated with thoughts of further life.
We conclude that the transfer was not made in contemplation of death.
The second question is whether the trust constituted a transfer intended to take effect in possession or enjoyment at or after death. Petitioner in effect contends that it was not the death of the decedent, but the death of others, which determined who would ultimately take the property and that the decedent retained no string to the corpus of the trust which was released by his death. Respondent, relying principally on *645 , argues that, since the decedent retained the right to the income from the trust during his life in the event he survived his wife, the decedent did not intend the transfer to take effect in possession or enjoyment until his death. Respondent further maintains that the decedent did not make a completed gift at the time of the creation of the trust.
The ultimate question before us is the same as that before the Supreme Court in There the question was stated as follows:
* * * Whether the transfer made by the decedent in his lifetime is "intended to take effect in possession or enjoyment at or after his death" by reason of that which he retained, is the crux of the problem. [Emphasis supplied.]
The trust in question was irrevocable. It provided that the income was to be paid to the decedent's wife for her life and on her death to the decedent for his life. On the death of the survivor of them the corpus was to be distributed in equal shares to the decedent's brother *915 and sister or their issue per stirpes. If the brother and sister predeceased without issue*646 the decedent and his wife, the corpus was to be distributed to the decedent's next of kin in accordance with the intestate laws of the State of New York. Thus, the decedent retained a life estate in the trust which depended on his outliving his wife.
This proceeding is almost precisely like . There, as here, the grantor of an irrevocable trust retained a life estate, contingent upon the grantee of another life estate predeceasing her. The Supreme Court considered as unimportant the question whether or not the grantor had predeceased her husband and held that the corpus of the trust was not includible in the grantor's estate as a transfer intended to take effect in possession or enjoyment at or after death.
After the decision of May v. Heiner, Congress enacted a resolution, the effect of which was to include in the gross estate of a decedent an inter vivos transfer of the type involved in that decision. Subsequent to the enactment of this resolution the Supreme Court, in *647 , held that the resolution did not apply to transfers made prior to the enactment of the resolution, even though the transferor did not die until after such enactment. Since the transfer in question was made prior to the enactment of the resolution, our decision would be controlled by May v. Heiner if that case and Hassett v. Welch were still to be considered the view of the Supreme Court.
More recently, however, the Supreme Court reiterated in , the following language from :
Nothing is to be gained by multiplying words in respect of the various niceties of the art of conveyancing or the law of contingent and vested remainders. It is perfectly plain that the death of the grantor was the indispensable and intended event which brought the larger estate into being for the grantee and effected its transmission from the dead to the living, thus satisfying the terms of the taxing act and justifying the tax imposed.
The Board, in *648 , faced with the problem of determining the applicability of Helvering v. Hallock, stated that the consequence of the Hallock case was that May v. Heiner may no longer be followed and that Hassett v. Welch, being deprived of the support of May v. Heiner, has no remaining force. We believe this position was adequately fortified and we adhere to the conclusion so announced. Since the case at bar presents a May v. Heiner situation, it follows that the reasoning of Helvering v. Hallock controls.
Under the provisions of section 302(c), as amended, a transfer intended to take effect in possession or enjoyment at or after death is includible in the transferor's gross estate. The purpose of this language was to prevent the avoidance of estate taxes by inter vivos gifts *916 which were testamentary in character. In this proceeding the decedent gave a life estate to his wife. So far as that life estate is concerned, the gift was a present gift, not testamentary in character and, therefore, was not includible in the decedent's gross estate. The Commissioner has recognized*649 this to be true, since he has excluded the value of the wife's life estate from the gross estate here involved. The enjoyment of the remainder interests in the corpus, however, was dependent upon the death of the decedent. To that extent it was testamentary in character and was a transfer intended to take effect in possession or enjoyment at or after death. Respondent is sustained.
Decision will be entered under Rule 50.