*1901 1.
2. A trust created within two years of the decedent's death was not made in contemplation of death.
3. The Commissioner's disallowance of a deduction of certain pledges to churches approved where it does not appear that they were claims against the estate incurred or contracted bona fide and for a fair consideration in money or money's worth.
*193 The Commissioner determined a deficiency in estate tax of $38,485.21. The petitioners allege that he erred:
1. In including $67,500 in the gross estate and in disallowing a deduction of $7,500, which together represented the value of a property on Tulpehocken Street in Philadelphia owned by the decedent and his wife as tenants by entireties;
2. In including $295,948.78 in the gross estate representing the value of an irrevocable trust created by the decedent within two years of his death;
3. In disallowing as deductions certain amounts which the decedent had pledged to two churches but had not paid and which the*1902 petitioners paid and were allowed credit for in the administration of the estate.
FINDINGS OF FACT.
The petitioners are the executors of the estate of Henry A. Romberger. The decedent died in and a resident of Philadelphia.
A piece of real property situated on Tulpehocken Street in the city of Philadelphia was conveyed to the decedent and his wife as tenants by entireties by a deed dated January 6, 1925, for a stated consideration of $75,000. The decedent and his family had returned to Philadelphia a few months before the property was purchased. The decedent intended to use the property as a residence for himself and his family.
*194 On April 2, 1925, the decedent and his wife entered into an agreement to sell this property for $75,000. The prospective purchasers paid the decedent $7,500 in cash on signing the agreement. Before anything more was done to complete the sale, the decedent died.
The petitioners did not include the value of the Tulpehocken Street property as part of the decedent's gross estate for estate-tax purposes. They reported as cash in bank an amount in excess of $7,500 and then deducted this amount, being the amount they paid to the decedent's*1903 wife as surviving tenant to place in her hands the purchase money for this property previously paid to the decedent. The Commissioner disallowed this deduction of $7,500 and added $67,500 to the gross estate on account of the value of the Tulpehocken Street property, thus increasing the gross estate by $75,000, representing the value of the property.
The petitioners also claimed deductions of $1,500 and $10,000, representing the respective amounts of pledges which the decedent had made but had not paid to two churches. These pledges were fully paid by the petitioners and the amounts thereof, together with the amount of $7,500 above mentioned, were allowed as proper expenditures by the probate courts which approved the accounts of the administration of the estate. The Commissioner disallowed these deductions.
On August 9, 1923, the decedent, while in good health, created a trust of which the Market Street Title & Trust Co. was trustee. The income from the trust property was to be paid to the decedent for life and thereafter to his wife for life. After the death of both, the principal was to be divided into two equal parts and held, the income to be used for the benefit of*1904 two sons of the decedent during their minority, then paid to each son. When each son became 30 years of age he was to receive part of the principal, and the balance when he became 45 years of age. The trust was irrevocable. The entire control of the trust property passed out of the decedent's hands at the time he created the trust. The annual income from the trust amounted to about $13,000 or $14,000. At the time of the decedent's death the value of the property held in this trust was $295,948.78. The petitioners did not include in the reported gross estate any amount representing the value of this property. The Commissioner included the above amount in the gross estate.
In May, 1921, the decedent had created a trust, the income of which was to be paid to his wife for her life and at her death the two sons were to benefit. In November, 1921, he created another trust, the income of which was to be used for the benefit of the two boys during their minority; they were to receive a part of the principal upon reaching majority and the balance later. The value of one of these trusts was about $145,000, and that of the other was *195 about $175,000. The value of the decedent's*1905 estate at the time of his death, exclusive of all property above mentioned, was about $1,250,000.
The decedent was about seventy years of age at the date of his death in May 10, 1925. In October, 1924, he had an acute attack of angina pectoris. This was the first indication that he had any heart trouble. In January or February of 1925 he had another slight attack. In May he had another sudden attack, from which he died instantly. Between these attacks he was able to attend to his affairs and to be more or less active. During this time he was more active and worked much harder than his doctors desired or advised.
Previous to the attack in October, 1924, the decedent had enjoyed excellent health. Although he had occasional physical examinations, he had seldom been attended by a physician, and when he had been so attended it was for minor ailments only. In the opinion of his physician, he was in excellent physical condition for a man of his years. Various tests failed to show any abnormality. He was in the manufacturing business. He worked hard, was energetic and very active both mentally and physically. He was never morbid, but frequently stated that he expected to*1906 live a long time. He arose early, usually walked part way to work, stood at a high desk in his office, ran up and down stairs, and in other ways made more than the usual requirements on his wiry body. He gave no indication up to October, 1924, of slacking his pace.
About 1920 he became a member of the board of directors of the Market Street Title & Trust Co. The trust officer of that institution, knowing of other trusts which he had established, urged him to establish a trust with the bank. The decedent discussed the idea with this officer at different times. During the years from 1920 to 1924, inclusive, he also discussed with other friends the three trusts herein mentioned. He told each that he wanted to gradually retire from business and to relieve himself from as much as possible of the burden of managing his property, so that he could enjoy the rest of his life with his family. In one of these conversations in 1922, one of his friends on the board of directors of the Market Street Title & Trust Co. suggested that he place a trust with that bank. He said he intended to do that. He had been going to California for short stays. In 1918 or 1919 he purchased a home there, *1907 partly because his sons were not strong and he thought they would grow stronger there. But in the fall of 1924 he sold it, returned to Philadelphia, and later purchased the Tulpehocken Street property. At the time of his death he had agreed to sell the latter property and to buy a large place in California. While he was in California he came to Philadelphia on business almost every other month.
*196 The trust of August 9, 1923, was not created in contemplation of or intended to take effect in possession or enjoyment at or after the decedent's death.
OPINION.
MURDOCK: The Supreme Court of the United States in the case of , and its companion cases, , and , has decided the first point in this case adversely to the petitioners' contention. The estate in the present case was created after the passage of the Revenue Act of 1924 and no contention is made that any of the property had, prior to the creation of the estate by the entirety, belonged to the surviving spouse. In the above cited*1908 cases the Supreme Court had before it the very question which is now before us, but despite this fact the petitioners here argue that the court might not have fully and correctly comprehended the incidents of tenancy by the entireties in Pennsylvania and might have been misled by differences between the estate in Maryland and the estate in Pennsylvania. For us to assume that the court made such an error would be decidedly out of place. If there was any such error, the Supreme Court will have to correct it.
The trust created on August 9, 1923, was created within two years prior to the death of the decedent and, therefore, is presumed to have been made in contemplation of death until the contrary appears. This trust took effect in possession and enjoyment immediately upon its creation, was not revocable, and was not intended to take effect in possession or enjoyment at or after the decedent's death. . The question, then, is, What evidence is there that it was not created in contemplation of death? The creator was in August, 1923, a healthy man who apparently expected to live a long time. The evidence negatives the possibility that*1909 he then expected death in the reasonably near future and for that reason created the trust in question. But such evidence might not be sufficient were it not for the fact that we have been shown he had another reason for creating the trust; namely, to relieve himself of the burden of personally handling the trust property. The trust officer of the bank, the attorney who drew the trust instrument, a member of the directorate of the bank who knew the decedent intimately, a close friend of the decedent, and the doctor of the decedent, all testified that the decedent was certainly not contemplating death in 1923, but in creating this trust he was following an announced plan to relieve himself of details of business so that he could better enjoy life with his family. Our judgment on this point is for the petitioner.
*197 The petitioners are not entitled to judgment in regard to the two pledges. We do not decide whether other pledges may or may not be deductible under section 303(a)(1) of the Revenue Act of 1924 as claims against the estate incurred or contracted bona fide and for a fair consideration in money or money's worth. We*1910 only know that the decedent had pledged the amounts mentioned to two churches, that the petitioners paid all or the unpaid balance of his pledges and that the probate courts thereafter approved the expenditures. This does not show that these pledges were claims against the estate incurred or contracted bona fide and for a fair consideration in money or money's worth.
Reviewed by the Board.
Judgment will be entered under Rule 50.
SMITH and TRUSSELL dissent.