Where the power was created by will of a non-resident and exercised by will of a resident, held: taxable. Matter of Frazier, N. Y. L. J., March 28, 1912. Bonds and mortgages on New York real estate transferred by a non-resident under the exercise of a power where there had been an intervening life estate, held: taxable under statute in force at date of the exercise of the power. Matter of Warden, 94 Misc. 563; 157 Supp. 1111. a. Burden of proof is on donee. b. There must be a present intent to give. d. Delivery to an agent. (1) To agent of donor. (2) To agent of donee. e. Symbolical delivery. f. Redelivery by donee to donor. g. Power of revocation. h. Stock transfer stamps. i. Consideration. 2. Gifts causa mortis. 3. Gifts in contemplation of death. c. Statutory time limit. d. Tax accrues at date of gift. Until recent years there was no thought that a gift from a person living and in the possession of his faculties could be the subject of taxation, much less of inheritance taxation. The question with which the courts were at first concerned was whether or not a gift had in fact been made-for, if not, then the property in question was still a part of the decedent's estate, and this has proved to be a question very frequently recurring in inheritance tax litigations. A peculiar feature of these contests is that the persons claiming exemption from the tax on the ground of a gift from the decedent would ordinarily receive the property in any event, for the executor would bear the burden of the contest were the claim of gift made by an outsider. It is cases of this sort that have led Congress and the State Legislatures to reach such property by taxing gifts inter vivos when made in contemplation of death or to take effect in possession and enjoyment after that event. The whole subject has become of added importance on account of the Federal Gift Tax. Volumes have been written on th esubject of gifts, their validity and incidental characteristics and only a brief review of the general legal rules is possible within the limits of this book. 1. Valid and invalid. As we have seen, the first question arising is whether there was in fact a valid gift, or whether the title to the property is still in the estate of the deceased. To establish that the alleged gift is not a part of decedent's estate the evidence must show donor's intent to give, delivery of the thing given and acceptance by or on behalf of the donee. Beaver v. Beaver, 117 N. Y. 421; 22 N. E. 940. Matter of Bolin, 136 N. Y. 177; 32 N. E. 626. Decedent attempted to deliver to beneficiaries specific assets belonging to his wife's estate. The latter estate had not been settled or distributed. Held that he had no title to such assets, but only to a distributive share of his wife's estate. The gift was therefore invalid. Whiting et al. v. Farnsworth, 108 Me. 384. a. BURDEN OF PROOF IS ON DONEE. The court said in Matter of O'Connell, 33 App. Div. 483: "He who attempts to establish title to property through a gift inter vivos as against an estate of a decedent takes upon himself a heavy burden which he must support by evidence of great probative force, which clearly establishes every element of a valid gift, viz., that the decedent intended to divest himself of the title in favor of the donee and accompanied his intent by a delivery of the subject-matter of the gift.' To the same effect are: Matter of Perry, 129 App. Div. 587; 114 Supp. 246. Doty v. Wilson, 47 N. Y. 580. Beaver v. Beaver, 117 N. Y. 421; 22 N. E. 940. Lehr v. Jones, 74 App. Div. 54; 77 Supp. 213. Hemmerich v. Union Dime S. I., 205 N. Y. 366; 98 N. E. 499. b. THERE MUST BE A PRESENT INTENT TO GIVE. It is axiomatic that the gift must be in praesenti and not in futuro. A mere promise of a gift in the future does not constitute a good gift inter vivos. "If the gift regards the future it is but a promise without consideration and has no validity." Parsons on Contracts (5th ed.), 15, § 1. This principle is well illustrated in the case of Holmes v. Roper, 141 N. Y. 64; 36 N. E. 180. In this case a note was given without consideration. This note was handed and delivered by the deceased to his brother, and after his death the brother sued the executor, but was unsuccessful, for the court held that the note was a mere executory promise in the future and therefore was not good as a gift either causa mortis or inter vivos. This principle was applied to a subscription to the building fund of a church: Twenty-third Street Baptist Church v. Cornell, 117 N. Y. 601, where the court said: "The promise died when she died, and was merely a good intention which did not survive her." Words which necessarily refer to the future cannot be construed to effectuate a present gift. Matter of Brown, 86 Misc. 187; 149 Supp. 138; aff. 167 App. Div. 912. C. THERE MUST BE DELIVERY OF THE THING GIVEN. "The necessity of delivery has been maintained in every period of the English Law." Kent's Commentaries, vol. 2, p. 348. The principle was applied in Harris v. Clark, 3 N. Y. 93. The decedent gave a draft for $30,000 to his sister upon R. Clark & Co., who had more than sufficient funds to meet it. The deceased had formerly been a partner of the concern, and it was amply solvent. But he died before his sister could present this draft to them for their acceptance. The court held that as there was no acceptance of the draft it was a mere promise to pay in case they did not pay, made without consideration and revoked by his death; also, as an order on R. Clark & Co. that it was revoked by his death. The rule has been followed in these cases: Matter of King, 51 Misc. 375, 381; 101 Supp. 279. Gregan v. Union Trust Co., 198 N. Y. 541; 92 N. E. 1085. Matter of Crawford, 113 N. Y. 366; 21 N. E. 142. In a box kept by decedent at his bank marked with his name and that of his sister-in-law there were unrecorded deeds from him to his sister-in-law, and also executed assignments of certain stock and a mortgage, and certificates of deposit endorsed on the back by him to the order of another sister-in-law. The several documents were in envelopes on which the decedent had written "the property of" with the name of the person: Held, no delivery and taxable as part of decedent's estate. Matter of Sharer, 36 Misc. 502; 73 Supp. 1057. d. DELIVERY TO AN AGENT. The rule seems to be: That a delivery to an agent or trustee of a donee is good; but that a delivery to an agent or servant of the donor is not and cannot be good delivery to the donee for the reason that the donor may countermand the gift at any time prior to the delivery by his agent to the beneficiary. (1) To Agent of Donor. A delivery to the agent of the donor to be delivered to a third person is not a good delivery. This rule is as old as the common law. In Lyte et ux. v. Peny, Easter Term, 33 Hen. VIII, a man gave money to third person to be delivered to a woman on the day of her marriage. The question was whether before her marriage he could countermand and revoke the gift. It was held that he could do so, the court reasoning: "For if a man delivers to his servant on New Year's Day a golden cup to give as a New Year's gift to a stranger, clearly he may countermand this, notwithstanding the gift, for it was not a gift perfectly executed." So where a decedent had given an order on a bank to transfer her account to the joint names of herself and her husband and died before the order was executed; held, no gift. Augsbury v. Shurtliff, 180 N. Y. 138; 72 N. E. 927. The same rule is laid down in Sessions v. Moseley, 4 Cush. (Mass.), 87, at page 92: "If, therefore, it be delivered to a third person with authority to deliver it to the donee, this depository, until the authority is executed by actual delivery to and acceptance by the donee, is the agent of the donor, who may revoke the authority and take back the gift, and therefore if the delivery does not take place in the donor's lifetime, the authority is revoked by his death; the property does not pass but remains in the donor and goes to his executor or administrator." This rule was followed in: Clapper v. Frederick, 199 Pa. St. 609; 49 Atl. 218. The delivery to the agent must be accompanied by the intent to give. If he holds as bailee his possession is not such as to complete delivery. Matter of Palmer, 117 App. Div. 360; 102 Supp. 236. Matter of Bolin, 136 N. Y. 177; 32 N. E. 626. |