William P. Gray, as of the Will of William G. Robertson, Deceased v. United States

The question here to be resolved is whether the trial court erred in holding that the proceeds of a life insurance policy on decedent’s life, which were paid to the decedent’s former wife in accordance with the terms of a pre-existing property settlement agreement, were deductible from decedent’s gross estate under Section 2053(a) of the Internal Revenue Code of 1954, as a claim against the estate. We conclude that the trial court did err, and the matter is remanded for further proceedings.

William Robertson, the decedent, and Jane Robertson, his wife, separated on August 15, 1966, after 22 years of marriage and four children. On August 24, 1966, William and Jane entered into a property settlement agreement which provided in pertinent part as follows:

Divorce proceedings were subsequently instituted by William in the Superior Court of the State of California for the County of Los Angeles. An interlocutory decree in divorce was entered on January 31, 1967. The decree itself made no specific reference to William’s obligation to maintain an insurance policy on his life, payable on his death to his former wife. However, the decree did contain the following provision:

A…