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Helfrich's Estate v. Commissioner of Internal Revenue.

June 2, 1944

HELFRICH'S ESTATE ET AL.
v.
COMMISSIONER OF INTERNAL REVENUE.



Petition for Review of Decision of the Tax Court of the United States.

Author: Minton

Before MAJOR, KERNER, and MINTON, Circuit Judges.

MINTON, Circuit Judge.

This is a petition to review a decision of the Tax Court upholding the Commissioner's assessment of a deficiency in estate tax of $1,271.83 against the estate of John Howard Helfrich and his executors. The dispute arises over the inclusion in the gross estate of the balances at decedent's death of four savings accounts created by him during his lifetime. The facts were stipulatled.

On November 26, 1934, decedent opened a savings account of $1,500 for each of his four children at the Harris Trust & Savings Bank in Chicago. At the same time he and his wife executed and delivered to the bank four instruments which were identical except for the number of the account and the name of the beneficiary. One of these instruments, omitting the account number and the beneficiary's name, is set out in full:

"Special Trust Agreement

"Dated November 26, 1934.

"J. H. Helfrich and Mrs. Elsa F. Helfrich herein called the 'trustees' hereby make known and declare that they hold all moneys now and hereafter deposited in account number . . . in Harris Trust and Savings Bank in trust for . . . , herein called the 'beneficiary', whose address is 707 University Place, Wheaton, Ill.

"During the lifetime of the trustees and the survivor of them all moneys now and hereafter deposited in said account may be paid to or upon the order of the trustees, or either of them, and upon the death of the survivor of the trustees all moneys deposited in said account shall be payable to or upon the order of the beneficiary. if either trustee shall be under legal disability which shall have been declared by a court of competent jurisdiction, he/she shall be deemed deceased for the purposes of this agreement. The said bank shall not be responsible for or required to see to the proper application of funds withdrawn from said account. The trustees represent that there is existing no agreement in respect of the said account except as herein set forth.

"Elsa F. Helfrich,

"J. H. Helfrich,

"Trustees for . . . "

Additional deposits of $2,500 to each account were made by decedent from time to time until his death in 1939, but the only withdrawal was $500 from the account of John Peter Helfrich which was used to defray part of that beneficiary's college expenses.

The Tax Court, 1 TC 590, held that the balances at decedent's death were includable in his gross estate because (a) valid trusts were not created under Illinois law, and (b) the gifts were transfers intended to take effect in possession or injoyment only at or after death, under Section 811 (c) of the Internal Revenue Code, 26 U.S.C.A. Int. ...


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