In 1929 the decedent established a trust, reserving a life estate in the income. On the termination of this life estate, the income was payable in equal amounts to the decedent's daughters. If either daughter died, that part of the corpus supporting the share of income of the deceased daughter was to go to her descendants; if none, then to the other daughter or her descendants. If both of the daughters died without issue, the corpus was to be paid to such persons as decedent appointed by will; if no appointment was made, the corpus was to go to certain charities. Decedent exercised her power of appointment at the time she executed her will in 1930. Both daughters survived the decedent, and both had issue. An estate tax was levied on the entire property of the trust. The executors paid the tax, and filed a refund claim on the theory that the values of the life estates in the daughters and the remainders in their issue should not have been included in the trust assets as part of the taxable estate. Held, the entire corpus of the inter vivos trust was subject to the estate tax since the settlor by means of the reserved power of appointment had retained a reversionary interest in the same. Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 65 S.Ct. 508 (1945).
Joseph R. Brookshire S.Ed.,
TAXATION-FEDERAL ESTATE TAX-REVERSIONARY INTERESTS UNDER THE RULE OF THE HALLOCK CASE-VALUATION,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol44/iss4/15