*1897 1. Under the facts in this case, the decedent is held to have been a resident of the United States at date of death.
2. Where, in a trust instrument, the grantor reserves the right to dispose of the corpus of the trust fund by will, and does so dispose of it, the title passes as per the will, and a revocable trust is created, the corpus of which should be included in the gross estate of the decedent.
*197 This proceeding is for the redetermination of a deficiency in an estate tax in the amount of $1,347.19.
There are three assignments of error, in substance, stated as follows:
(a) The inclusion by the Commissioner, in the gross estate, of a fund held in trust by the Bank of New York & Trust Co., amounting in the aggregate to $77,557.22.
(b) The Commissioner erred in holding that the decedent was a nonresident of the United States at the date of her death.
(c) The Commissioner erred in disallowing, as deductions, $1,712.03, funeral expenses; $283.31, executor's commissions; $2,500, attorney fees; $694.56, miscellaneous administrative*1898 expenses; $920.69, debts of the decedent.
*198 FINDINGS OF FACT.
Petitioner is the duly qualified and acting executor of the last will and testament of the decedent. The decedent died testate in Paris, France, as the result of an automobile accident, on June 22, 1925. She left surviving her a husband, from whom she was separated, though not divorced, and one child, a minor, and a gross estate of the estimated value of $128,360.88.
She was born in Honduras, Central America, about 1886. In 1892 she moved with her parents to Guatemala, where she married Valentine in 1913. It is admitted that the decedent was an American citizen. As a bride, decedent came to Washington, D.C., with her husband in 1913 or 1914. In 1914 she and her husband lived in Washington, D.C., and at least a large part of the time from 1914 to 1920. she lived in Washington, although a part of that time her husband did not live with her. Valentine appears from the evidence to have been a brilliant, highly cultured young man, and his wife his equal in that respect. In society they went mostly among the diplomatic set and were elaborate entertainers. Valentine made an effort to get into the diplomatic*1899 service, but did not succeed. Between the time of his first arrival in Washington and 1920, Valentine was sometimes in the United States, sometimes in Central America, and sometimes in Europe. After his failure to get into the diplomatic service, he embarked in the oil business, and was connected with several big deals, some in the United States, some in Central America, and some in Europe.
Prior to 1920 trouble arose between Valentine and his wife, and for a time he lived in New York and she lived in Washington. She had loaned her husband some of her own money, which he was using in his oil deals. In 1920 he went to Europe, ostensibly on a short business trip. For some reason his wife followed him. Before she left she had expressed her intention of returning to the United States and arranged to leave her four-year-old daughter (a deaf mute) with her sister until her return. At the last moment, however, she cringed from such a separation from her daughter and took the child and nurse with her. She never returned to the United States. She went direct to London, but was in France part of the time, at times in Italy, and in other countries of Europe. Her brother was associated*1900 with her husband in the oil business, and she would usually go where they went. During at least the greater part of that time she and her husband did not live together. At the time of her death, she was living in Paris, France, and he lived in England.
In 1923 or 1924, her husband having paid her, in francs, some money he owed her, she decided to invest it in France rather than *199 take a loss in the then rate of exchange, and she purchased an apartment house. At the date of her death she was living in one of the apartments of that house. For her trip in 1920, the passport issued to her by he Secretary of State, Colby, was "for travel" in the British Isles, France, Belgium and Spain, and on the page for her signature, in apparently the same handwriting, her United States address is given as 1726 N Street, N.W., Washington, D.C. Subsequent passports do not contain blanks calling for such information, and consequently do no contain any such address. Of her subsequent passports, one dated November, 1922, was for all countries for temporary residence and travel, and one in 1925 was for travel in the British Isles, Italy, Spain, Monaco, and Switzerland. Before going to*1901 Europe she expressed her intention of returning to the United States and making her permanent home her. While abroad, her little daughter was under the care of an English-speaking nurse at all times and was taught and learned only the English language.
While Mr. and Mrs. Valentine resided in Washington they became friends of Mr. and Mrs. Joseph E. Davies, and Mr. Davies was a witness in these proceedings. In 1923 Mr. Davies saw Mrs. Valentine in Paris and, at her request, gave her some friendly advice in regard to her business affairs. She disclosed to Davies her family troubles and asked his advice in regard to creating another trust fund (in addition to one created in 1920), and he advised her to do so and, for convenience, to put that fund in a Paris trust. She objected to that suggestion and stated to him that she wanted to live in the United States, and wanted her daughter reared and educated there, and that she wanted her funds in a United States trust. She did create that second trust.
The pertinent paragraphs of the trust instrument, dated November 4, 1920, are as follows:
THIS INDENTURE made the 4th day of November, 1920, between Maria Cristina Midence Flores*1902 Valentine, residing in the City of Washington, District of Columbia, party of the first part (hereinafter called the "Grantor"), and New York Life Insurance & Trust Company, a corporation of the State of New York, having its principal place of business at No. 52 Wall Street, Borough of Manhattan, City, County and State of New York, party of the second part, (hereinafter called the "Trustee.")
WHEREAS, the Grantor herein desires to create a trust of the property and for the purposes hereinafter mentioned.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in consideration of the premises, the mutual covenants herein contained and of other good and valuable consideration and the sum of One Dollar ($1.00) to her in hand paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, the Grantor has given, granted, bargained, sold, conveyed, assigned, transferred, set over and delivered, and by these presents does give, grant, bargain, sell, *200 convey, transfer, assign, set over and deliver unto the Trustee, its successor, successors and assigns the following securities:
* * *
TO HAVE AND TO HOLD all and singular*1903 the said property, real and personal, unto the said Trustee, its successor, successors and assigns IN TRUST NEVERTHELESS for and upon the following uses and purposes and subject to the terms, conditions, powers and agreements hereinafter set forth.
FIRST: During the lifetime of the Grantor to invest and reinvest the same, collect the income thereof, and pay such income in monthly installments to the Grantor.
SECOND: Upon the death of the Grantor, to divide and pay over the trust fund to and among such person or persons, corporation or corporations, and in such shares, whether in trust or otherwise, as the Grantor may be Last Will and Testament prescribe.
THIRD: Upon the death of the Grantor, and should she fail to exercise such power of appointment, then the Trustee shall divide the trust fund into equal shares, one share for each child of the Grantor then living, and one share for the issue cellectively of each child of the Grantor who may theretofore have died leaving issue then living, and shall subdivide the share of such issue of each deceased child for such issue equally per stirpes and not per capita. The Trustee shall transfer and pay over absolutely his or*1904 her share to each of such children, or each of such issue, who may then be over the age of thirty years, and, during the residue of the life of Maria Cristina Valentine, shall hold the shares of the remaining children or issue of the Grantor in trust, invest and reinvest the same, and collect and pay over the income thereof to such child or issue for whom it shall be held, in monthly installments, until the beneficiary shall attain the age of thirty years, and thereupon the trust shall cease as to such share, and the Trustee shall transfer and pay over the principal of the trust absolutely to such child or issue of the Grantor for whom it shall have been held. If such beneficiary die before attaining the age of thirty years, then the trust as to his or her share shall cease, and the Trustee shall transfer and pay over the principal thereof to such person or persons, corporation or corporations, and in such shares as the beneficiary shall by will appoint, and if he or she fail to appoint, then to his or her issue then living, per stirpes and not per capita, and in default of issue then living, then to the issue of the Grantor then living per stirpes and not per capita,*1905 and if no issue of the Grantor be then living, then to and among Lincoln G. Valentine, husband of the Grantor, Adolph V. Midence and Ramon E. Midence, brothers of the Grantor, and Julia Midence de Joest, sister of the Grantor, or such of them as may then be living, in equal shares absolutely. Should any one of the said Adolph V. Midence, Ramon E. Midence or Julia Midence de Joest be then dead, the share of the one so dying shall be transferred and paid over to his or her issue then surviving, per stirpes and not per capita, in equal shares absolutely, and in default of issue then surviving, to and among such of the said Adolph V. Midence, Ramon E. Midence or Julia Midence de Joest as may be then surviving and the issue then living of any one of them who may theretofore have died, per stirpes and not per capita, in equal shares, absolutely.
* * *
FIFTH: The Grantor reserves the right hereby, during her lifetime, at and after the expiration of twenty years from the date of the execution hereof by instruments in writing, duly acknowledged, to revoke, amend or modify this indenture.
* * *
TENTH: *201 In case of the resignation of the Trustee hereunder, *1906 a new Trustee may be chosen and appointed by the Grantor. Such appointment shall be made in writing and signed by the Grantor properly acknowledged so as to entitle it to be recorded. If the Grantor shall neglect or fall to fill such vacancy within six months after it occurs, on the application of any person interested in the trust property a new Trustee shall be appointed by the Supreme Court of the State of New York, County of New York, and any subsequent vacancy in the office of the Trustee shall be filled in like manner, first, by choice and appointment by the Grantor as aforesaid and failing that, by appointment by the said Supreme Court as aforesaid. On the filling of every such vacancy, such instruments, transfers and conveyances shall be made as shall be requisite or convenient to vest the title to the trust property in the new trustee. Each successive Trustee shall have all rights and powers hereby granted to the Trustee hereunder as if named as the original Trustee under this deed of Trust.
No Trustee hereunder shall be required to give a bond as such Trustee, except at the option of the Grantor.
* * *
This Indenture is executed and delivered in the State of New*1907 Yo rk, and shall be governed, as to all questions arising hereunder, by the laws of the State of New York.
The trust instrument dated November 6, 1924, was offered and received in evidence only for the purpose of showing certain recitations therein, and is not otherwise pertinent. The pertinent paragraph is as follows:
THIS INDENTURE made the 6th day of November, 1924 between Maria Cristina Midence Flores Valentine, of the City of Washington, District of Columbia, temporarily residing at Paris, France, party of the first part, (hereinafter called the "Grantor"), and the National City Bank of New York, a corporation of the United States of America, having its principal place of business at New York, United States of America, party of he second part, (hereinafter called the "Trustee".)
Petitioner conceded that the fund in this second trust is taxable, and paid the tax.
The pertinent paragraphs of the will are as follows:
I, MARIA CRISTINA MIDENCE FLORES VALENTINE, of the City of Washington, District of Columbia, do hereby make, publish and declare this my Last Will and Testament, intending hereby to dispose of all property which at the time of my death shall be owned by*1908 me, or over which at such time I may have power of appointment or disposition.
* * *
FOURTH: Whereas by Deed of Trust executed and delivered on the 4th day of November, 1920, I transferred and delivered certain property therein set forth to New York Life Insurance and Trust Company, upon trust, for the purpose therein mentioned, and reserved to myself therein the power to appoint by my will the property therein mentioned and such additional property, real or personal, as I might from time to time add to said trust, NOW THEREFORE, in exercise of the power of appointment so reserved, I devise and bequeath all the property, real or personal, of which said trust shall consist at the time of my death, to my Executor, upon trust, to divide the trust fund into equal shares, one share for each child of mine then living, and one share for the issue collectively of each child of mine who may therefore have died *202 leaving issue then living, and to subdivide the share of such issue of each deceased child for such issue equally per stirpes and not per capita. The Trustee shall transfer and pay over absolutely his or her share to each of such children, or each of such issue, *1909 who may then be over the age of thirty years, and during the residue of the life of Maria Cristina Valentine, shall hold the shares of the remaining children or issue of mine, in trust, invest and reinvest the same, and collect and pay over the income thereof to such child or issue for whom it shall be held, in monthly installments until the beneficiary shall attain the age of thirty years, and thereupon the trust shall cease as to such share, and the Trustee shall transfer and pay over the principal of the trust absolutely to such child or issue of mine for whom it shall have been held. If the beneficiary die before attaining the age of thirty years, then the trust as to his or her share shall cease, and the Trustee shall transfer and pay over the principal thereof to such person or persons, corporation or corporations, and in such shares as the beneficiary shall by will appoint, and if he or she fail to appoint, then to his or her issue then living, per stirpes and not per capita, and in default of issue then living, then to my issue then living, per stirpes and not per capita, and if no issue of mine be then living, then to and among my husband, Lincoln G. Valentine, *1910 my brothers, Adolph V. Midence and Ramon E. Midence, and my sister, Julia Midence de Joest, or such of them as may then be living, in equal shares, absolutely. Should any one of the said Adolph V. Midence, Ramon E. Midence or Julia Midence de Joest be then dead, the share of the one so dying shall be transferred and paid over to his or her issue then surviving, per stirpes and not per capita, in equal shares, absolutely, and in default of issue then surviving, to and among such of the said Adolph V. Midence, Ramon E. Midence or Julia Midence de Joest as may be then surviving and the issue then living of any one of them who may theretofore have died, per stirpes and not per capita, in equal shares, absolutely.
In addition to the securities put into the two trust funds, decedent owned an interest in a farm, or ranch, in Costa Rica, and some other properties, the values of which are not disclosed with any degree of certainty.
Considering all the evidentiary facts, we find as an ultimate fact, that in contemplation of section 303(a) of the Revenue Act of 1924, decedent was, at the date of her death, a resident of the United States.
Petitioner claimed deductions*1911 on its estate-tax return, the amounts paid being as follows:
| Funeral expenses | $1,712.03 |
| Executor's commissions | 283.31 |
| Attorney fees | 2,500.00 |
| Miscellaneous administrative expenses | 694.56 |
| Debts of decedent | 920.69 |
| Total | 6,110.59 |
The Commissioner disallowed those deductions on the ground "that the information showing the amount of the gross estate not situated in the United States, as provided by section 303(c) of the Revenue Act of 1924, has not been furnished."
*203 The above listed amounts were paid, and a report of the same was made to the probate court, and such report was duly approved by the court.
OPINION.
LOVE: In discussing the contested issues in this case, we desire to discuss, first, the issue of residence, vel non, which is involved in assignment of error (b). The term "residence" as contemplated by the tax statutes, so far as we have a been able to ascertain, has never been construed, or defined, by an all-inclusive and all-exclusive definition. In fact, it seems that such a definition is impossible. Every case possesses peculiarities different from any other case, and the issue must be decided in the light of the facts*1912 peculiar to each case.
One of the fundamental tests to be applied is intention. Under ordinary circumstances, the place of birth is one's first residence. He may abandon that residence, and adopt another if he chooses so to do. Whether in fact, he does so choose to do, no one but himself knows or can know with absolute certainty. We can only have a belief of varying degrees of certainty, after considering that person's declarations, conduct, character, temperament, etc.
The following cases discuss the principles that should be kept in mind when considering the facts of a specific case. ; ; ; In the ; In the ; ; .
Living in a house does not necessarily constitute that house one's legal residence. It may be an evidentiary circumstance requiring explanation, that tends to point out residence, *1913 but is by no means conclusive evidence of legal residence.
If credence be given the evidence in this case, and we have no grounds to discount it in the least, the decedent when she left the United States in 1920, did so with the expressed intention of returning in the near future. Circumstances over which she had no control - an estranged husband with some of her money in his possession wandering in Europe in a highly speculative business - forced her to remain beyond her expectations and desire. Her pass-ports all express her purpose in Europe as travel. In her letters to her sister she declared her intention of returning to this country and went so far as to request her sister to arrange for the purchase of a house in California for her to use as her home. She definitely declared to Mr. Davies in 1923 that she intended to return to the United States and live here; that she wanted her daughter reared and educated here, and under the laws of the United States; *204 she refused to create a Paris trust for her funds she was trying to conserve for her little daughter and insisted on creating a United States trust. In the two trust instruments executed by her and in her*1914 will, she described herself as a resident of Washington, D.C. There are no conflicting circumstances in this record, if we may ignore the one fact that she did not return to the United States in what might be termed a reasonable time. In all of her actions and oral expressions she disclosed an attachment to and preference for the United States as a home, and gave reasons for such feelings that would hardly have been expected from a foreign-born person, and would be praiseworthy if they had come from a native-born and reared citizen. We hold that the decedent, at the date of her death, in contemplation of the tax statutes, was a resident of the United States.
We will now discuss, briefly, assignement of error (a), which complains of the action of the Commissioner in including in the gross estate the $77,557.22 created by the trust instrument dated November 4, 1920. It is the contention of petitioner that by reason of the fact that in her will decedent disposed of the assets comprising the corpus of the trust fund exactly in the same way and with the same persons as beneficiaries as provided in the trust instrument, that no title passed by her attempt to exercise the power of*1915 appointment which she reserved to herself in the trust instrument, and hence the origin of the title that passed on her death is the trust instrument. In other words, that in so far as the assets comprising those trust funds are concerned, the provisions of the wil may be ignored. Petitioner argues that "it is a recognized principle of law in this country that the appointee of a power takes under the original instrument creating the power, and not under the exercise of the power," citing ; ; , and others.
In the instant case that doctrine is not applicable, and of course the cases cited in support of that doctrine are not applicable here. The cases cited apply where a trust is created by one person, called the donor, granting to another person, called the donee, a power of appointment. In cases where the creator of the trust reserves to himself the control over the final disposition of the corpus of the trust, a different situation exists. Strictly speaking, there is no power of appointment granted - no donor, *1916 and no donee. The creator of the trust simply reserves to himself the final disposition of the trust corpus. In such a case, and where a tentative disposition is made of the corpus in the trust instrument, with a reservation of a right to revoke the trust, or finally dispose of that corpus by will or *205 otherwise, a revocable trust is created; that is the situation we have in the instant case.
The decedent created a revocable trust, reserving to herself the power to dispose of the corpus by will. Whether or not she exercised such right, the power to do so remained to date of death, and by reason of that situation the case is controlled by the decision in the case of , and cases therein cited. See also .
The value of the corpus of the trust in question should be included in the gross estate of the decedent.
It is unnecessary to decide whether the title to the property passed by virtue of the will or by virtue of the trust instrument.
With reference to assignment of error (c) in respect to funeral expenses, and other items of expense, the Commissioner*1917 disallowed them as presented, because he had decided that the decedent was not at the date of her death a resident of the United States. He disallowed the whole amounts because no evidence of the value of property located outside the United States had been furnished as provided for in section 303(c) of the Revenue Act of 1924.
There was no issue raised in regard to the reasonableness of those expense items, their payment, or their deductibility in whole, in the event it were found and held that decedent was a resident of the United States.
We have herein held that the decedent was a resident of the United States at the date of her death, and hence hold that the expense items listed in the findings should be allowed as deductions from the gross estate.
Reviewed by the Board.
Judgment will be entered under Rule 50.
MURDOCK concurs in the result only.