TAXATION - FEDERAL ESTATE TAX - TRANSFERS IN WHICH DECEDENT HAD RESERVED A CONTINGENT REVERSIONARY INTEREST - ST. LOUIS UNION TRUST CASES OVERRULED

In 1919 decedent transferred property in irrevocable trust, income to be paid to X for life and on X's death, the corpus and accumulated income to be returned to the settlor, if he should then be living; but if he should then be dead, remainder to Y. The settlor predeceased the life beneficiary and the commissioner included the trust property in decedent's gross estate under section 302 (c) of the federal estate tax. The board of tax appeals reversed this determination, and the board was upheld by the United States Circuit Court of Appeals for the Sixth Circuit, on the authority of the St. Louis Union Trust cases. Held, the "untenable diversities" of the St. Louis Union Trust cases must be rejected and those cases are overruled. In accordance with Klein v. United States, dispositions by way of trust which provide for return or reversion of the corpus to the donor upon a contingency terminable at his death are properly included in decedent's gross estate as transfers "intended to take effect in possession and enjoyment at or after his death" under section 302 (c) of the Revenue Act of 1926.

Helvering v. Hallock, 309 U.S. 106, 60 S. Ct. 444 (1940).