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Keywords

trustsustained

Related Cases

Huston Estate, Not Reported in Atl. Rptr., 1965 WL 226717

Facts

Emily R. Huston was an employee of The First National Bank and Trust Company of Hanover for approximately 42 years and participated in a profit-sharing retirement trust. Upon her retirement, she was entitled to periodic payments from the trust, but she had no right to withdraw any balance or assign her benefits. After her death, the executrix objected to the inclusion of the trust fund in the inheritance tax appraisement, arguing that the decedent's rights did not constitute ownership for tax purposes.

The decedent, as an employee of The First National Bank of Hanover, became a participant in the original 'Trust' which the latter created for its employees effective January 1, 1945.

Issue

Whether the retirement trust fund payable to the decedent's beneficiary is subject to inheritance tax under the Inheritance and Estate Tax Act of 1961.

Rule

Under Section 316 of the Inheritance and Estate Tax Act of 1961, payments under pension, stock-bonus, or profit-sharing plans to distributees designated by the decedent are exempt from inheritance tax if the decedent did not have the right to possess, enjoy, assign, or anticipate the payments before death.

Under Section 316 of the Inheritance and Estate Tax Act of 1961, payments under pension, stock-bonus, or profit-sharing plans to distributees designated by the decedent are exempt from inheritance tax to the extent that decedent before his death did not otherwise have the right to possess (including proprietary rights at termination of employment), enjoy, assign or anticipate the payments so made.

Analysis

The court analyzed the terms of the retirement trust and determined that the decedent had no rights to possess or control the funds at the time of her death. Although the plan referred to the employee's interest as 'vested,' the decedent's rights were limited to receiving periodic payments, and she had no ability to withdraw or assign the funds. Therefore, the court concluded that the funds were not subject to inheritance tax.

The court analyzed the terms of the retirement trust and determined that the decedent had no rights to possess or control the funds at the time of her death.

Conclusion

The court sustained the executrix's protest against the inclusion of the retirement trust fund in the inheritance tax appraisement, ruling that the funds were not taxable.

The protest against the inclusion of such proceeds in the inheritance tax appraisement is hereby sustained.

Who won?

The executrix prevailed in the case because the court found that the decedent had no rights to the funds that would subject them to inheritance tax.

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