1882, he executed a deed, assigning all his property to trustees for their own use and benefit during his life, and at his death to hold the same for the uses and purposes of his will. The court holds that the property is subject to a collateral inheritance tax, as the deed was not to take effect in enjoyment until after the death of the testator. Appeal of Seibert, 110 Pa. St. 329, 1 A. 346.

Where the decedent transferred her property to trustees in trust to collect the income and apply the same to her use during her life and after her death to divide and pay over the same and the proceeds among her three nieces, reserving the power to modify the instrument, the court holds that it is not important to determine whether the trust instrument was made in contemplation of death. The real question is whether the remainders which the nieces took were intended to "take effect in possession or enjoyment" at or after the death of the donor. And the court holds that it is quite clear that these nieces did take by an instrument intended to take effect at or after the death of the donor. In re Green, 153 N. Y. 223, 47 N. E. 292, reversing 7 N. Y. App. Div. 339.

'Where a trustee gives the income of his estate to beneficiaries for life and the principal to them at his death, it is as to the principal a transfer intended to take effect at the death, and hence subject to the inheritance tax. In re Patterson, 127 N. Y. Suppl. 284.

In 1893 the decedent deposited certain sums of money with a trust company under a trust agreement that the income was to be paid to a certain third party and at the expiration of five years from the date of the agreement the decedent might withdraw the whole trust fund by giving the company written notice of an intention so to do six months before that time, and the company could pay off the trust fund if it chose by giving him a like notice of its intention. If no notice was given by either party, the trust fund was to remain during another term of five years and the right of withdrawing or paying off the principal sum might be exercised at intervals of five years from the date of the agreement. In case of the death of the decedent before the termination of the trust, the trust fund was to be payable to a certain third party. The decedent died before the trust fund was terminated and the court holds that a tax is due on the transfer to the third party. The court holds that this gift was intended to take effect in possession or enjoyment after the death of the grantor, as the beneficiary could have no possession or enjoyment of the principal until after his death; and the fact that she had possession and enjoyment of the income in his lifetime makes no difference. The income and principal stood each by itself and were as independent of each other as if the income had been given to a third person. The property is subject to a tax to be assessed as of a time thirty days after the expiration of the five years referred to in the agreement and interest is to be paid upon the tax from that time. New England Trust Co. v. Abbot, 205 Mass. 279, 91 N. E. 379.

'The decedent in 1893 transferred to his four daughters eleven shares of stock in a certain company, and the daughters on the same day delivered to him an instrument reciting that he had transferred the stock on condition that he is to receive all dividends during his life, and also on condition that he has the right to vote upon the stock as though no transfer had been made. The agreement further provided that it was not revocable, but to continue in full force until the death of the decedent. The court holds that the two instruments being executed at the same time must be construed together as a single instrument; that the effect of these was to transfer to the daughters the remainder in stock after the

donor's death, reserving to the latter an estate for his life. The court, relying on In re Green, 153 N. Y. 223, holds that this is a gift of remainder after the death of the donor and is taxable as a transfer "intended to take effect in possession or enjoyment at or after such death." In re Brandeth, 169 N. Y. 437, 62 N. E. 563, 58 L. R. A. 148, reversing 58 N. Y. App. Div. 575, 69 N. Y. Suppl. 142.

Sec. 101. Deed Dependent on Will.

Where the settlor in a voluntary trust deed reserves the right to limit in his will the terms upon which the beneficiaries might enjoy his bounty, and he does make a will, then devolution of the property takes place under the will.

In re Douglass County, 84 Neb. 506, 121 N. W. 593.

Sec. 102. Trust Deed.

There is no tax where property is placed outright in trust for another not dependent on death, but a deed in trust will create taxable interests under the circumstances indicated in the following sections.

Where a trust deed was executed, dated December 1, 1892, directing the trustees to pay the net income to the guardian of a certain grandson until his majority on December 3, 1895, when the principal shall be paid to him, this was not subject to the inheritance tax. In re Masury, 159 N. Y. 532, 53 N. E. 1127, affirming 28 N. Y. App. Div. 580.

Sec. 103. Trust Imposed by Extrinsic Evidence.

Where a legatee took a legacy impressed with a trust imposed by facts extrinsic to the will, for purposes exempt from taxation, the legacy is still taxable, as the legatee takes under the will the legal title and the equitable rights did not accrue under the will but from extrinsic evidence alone.

In re Edson, 159 N. Y. 568, 54 N. E. 1092, affirming 38 N. Y. App. Div. 19, 56 N. Y. Suppl. 409.

Sec. 104. Sale.

The meaning of the word "sale" as used in the Ohio statute includes only transactions which, though in form sales, are in fact gifts. Since the act is within the legislative power granted and not within the letter or spirit of any limitation, it is valid.

Hagerty v. State, 55 Ohio St. 613, 626, 45 N. E. 1046, affirming 12 C. C. R. 606.

Sec. 105. Joint Deposit.

Where the husband and wife deposited money in a savings bank in their joint names, with account payable to either or survivor, the wife has an interest in the deposit to give her an equal right with him to withdraw it during their joint lives and vests her with the absolute title in case she survives him. The court holds that in this case it was not the intention of either party to divest himself of the control and use of this money so long as both lived, and that the accounts were entered so that either could draw money during their joint lives as a matter of convenience, and upon the death of either the deposits would become the absolute property of the survivor. The court holds that the husband did not surrender the absolute possession and dominion of the money in question during his lifetime, and that, although there was no intention on the part of the parties to evade the transfer tax law, yet as the transfer had not become absolute until the death of the depositor such parts of the different deposits as were not the money of the wife when deposited are taxable.1

A joint deposit in a savings bank made up of sums which were given by the decedent to his wife is not taxable.2

1 In re Kline, 65 Misc. 446, 121 N. Y. Suppl. 1090.

Contra. The act of depositing money in the joint names of the husband and wife indicates an intent to invest the title of the money in the survivor, and the deposit being joint is in the nature of an agreement or contract between the husband and wife, is not testamentary nor does it depend upon the intestacy or testacy of the decedent. In this case there is no suggestion that the joint deposit was made with intent to evade the transfer tax. The survivorship is a mere incident. In re Stebbins, 52 Misc. 438, 103 N. Y. Suppl. 563. In re Graves, 52 Misc. 433, 103 N. Y. Suppl. 571. See National Safe Deposit Co. v. Stead, 250 III. 584, 95 N. E. 973, upholding law forbidding safety deposit companies from delivering contents of box leased jointly on death of a lessee except on ten day's notice to state officials. See also In re Wilkins' Estate, 129 N. Y. S. 600. An irrevocable trust in the guise of a joint deposit was found in In re Pierce, 132 N. Y. App. Div. 465, 116 N. Y. Suppl. 816, reversing 60 Misc. 25, 112 N. Y. Suppl. 594.

In re Rosenberg, 114 N. Y. Suppl. 726. See post, s. 158.

Sec. 106. Compromise of Interests under Will.

The question whether sums paid in compromise of litigation are subject to tax may depend on the wording of the taxing statute and usually resolves itself into a question whether the property passes under the will or on death, or by virtue of the agreement. There seems to be some confusion in the cases and considerable

difference of opinion has developed, ranging from the Massachusetts view that agreements among the parties cannot be considered as affecting interests under the tax, to the Pennsylvania doctrine that the man who actually receives the property should pay the tax. The Massachusetts court in its most recent decision has expressly refused to follow the Pennsylvania view. It would seem that the Massachusetts doctrine is preferable both on principle and as a practical matter of policy. The other view is an open inducement to unscrupulous persons to make such collusive arrangement as may save their pocketbooks at the expense of their conscience.

Payments made in good faith to heirs in settlement of contests over the validity of a will should be included in reckoning the inheritance tax,2 even though the will is disallowed by agreement, and the balance, after paying certain sums to the legatees, is given to the contestants, although such sums may not be taxed on the ground that they are not interests under the will within the language of the act. So payments in adjustment of conflicting claims to an estate under different wills are subject to tax.5

A testator made two wills and the heirs of the sole legatee in the first will contested the second will, but compromised under an agreement by which the will was to be probated and the estate was to pass under the last will in default of a contest. In so passing it became subject to the inheritance tax and moneys paid out by those receiving it, whether in litigating the contest or in buying their peace, ought not to be deducted from the estate in ascertaining the value of the property subject to such tax. The court holds that payments in adjustment of conflicting claims to an estate by those asserting title thereto cannot be construed as debts nor treated as expenses in its settlement. The entire estate including the sums to be paid the contestant passed to the legatees of the deceased upon his death, and payments in settlement are in law by the legatees rather than an expense of the estate. The court relies on In re Westurn, 152 N. Y. 93, 46 N. E. 315. The court distinguishes the case of In re Hawley, 214 Pa. St. 525, as in that case the daughters who took the property under the will and paid over in compromise were direct descendants and therefore no tax was due, while in this case the estate was acquired by the heirs as they were collateral, was subject to the tax, and in paying it out they were handling their own property. The court also distinguishes In re Kerr, 159 Pa. St. 512, 28 A. 3 54, as there the compromise was of a contest over the testator's title."

The testator had made two wills and the second will was contested and, under an agreement of compromise executed by the parties, it was agreed that contestants were to "pay C. the legacy given her under said [second] will." The court was evenly divided on the question whether this payment was subject to the inheritance tax. If the payment was made under the will it was subject to the tax, and if the payment went under the agreement it was not.8

But where the legatees who are all collateral relatives of the testator made a compromise with a son whereby they paid him a certain sum in settlement, and in consideration thereof he withdrew his contest and the will was admitted to probate, the collateral legatees are not liable to pay the collateral inheritance tax on money paid to the son. The reason is that the amount paid the son "was never received by them as legatees, and under the act it is only so much of the estate which actually passes to them by virtue of the will that is liable to the tax."9

A contest over the will was compromised by an agreement. The contest against the will was withdrawn and the jury thereupon found in favor of the will. The contest was made by the collateral heirs and the compromise provided that the widow who was the sole devisee should deed one-half of the property devised to the collateral heirs, and this was done. The court holds that the collateral heirs do not derive their title under the will but from the deed of the widow; that they therefore do not take by inheritance, will, deed, grant, gift or otherwise from the testator, and hence, under the provisions of the Tennessee statute, no inheritance or succession tax attaches to the property in transfer.

The counsel suggested that by fraud and collusion the state might be entirely defeated of its tax, but the court replies that there is no semblance of proof in the record that this compromise was not made in the utmost good faith and not as a mere subterfuge to evade the payment of the tax.10 On the other hand the opposite result has been reached in Colorado."

It may be that money paid to one who under no theory could take, whether the decedent died testate or intestate, should not be subject to tax.12

Money paid in compromise of a claim against the testator's title 13 or to settle claims of creditors named as legatees, however, should not be taxed, as it forms no part of the estate of the decedent.14 A compromise may create interests to take effect in the future