Olincy

Both the state Controller and the executor of the decedent’s will have appealed from the order determining and fixing the state inheritance tax due from this estate. The executor contends that the court below erred in overruling one of his objections to the report of the inheritance tax appraiser and in fixing the tax in an amount $66,752.84 in excess of the $56,595.23 conceded to be due. The Controller argues that there was error in the "striking down” of certain of the Controller’s inheritance tax regulations.

Summary of Material Facts

On June 21, 1950, the decedent, hereinafter referred to as “Norman,” and his attorney, George R. Olincy, hereinafter referred to as “ Olincy, ’ ’ executed a declaration of trust, and in July 1950, Norman, as trustor, transferred to Olincy, as trustee, certain voting trust certificates. By the terms of said declaration of trust, Norman reserved the income for his life and after his death to five other persons for their lives. The trust was to terminate upon the death of the last survivor of these named persons and the remainder of the then existing corpus was to be distributed to certain charities. Norman reserved the right to change the life…

I dissent.

On a transfer for consideration of a future interest in property to take effect on the termination of a life estate, our statute requires the computation for inheritance tax purposes of the value of the consideration received at the time of the transfer in relation to the value of the future interest given away. Revenue and Taxation Code, section 13641, reads:

On valuation of future estates and obligations, Revenue and Taxation Code, section 13953, is controlling:

I agree with the majority opinion that we should accept the transaction in the form in which the parties cast it, that of an interest-free loan to Norman of $50,000, repayable on the termination of the trust, in return for which the lender’s sons were irrevocably designated as remaindermen of the trust. Otherwise the transaction would amount to the sale of a capital asset, and Norman’s tax liabilities would have increased rather than decreased. But, for the very reason we accept the transaction as a loan, we must recognize and take into our calculations the existence of an obligation to repay it. I also agree that an interest-free loan for a period of years may be valuable consideration and that we should…