In re Estate of Hill

Walter J. Hill had three different contingent interests in an inter vivos trust at the time of his death in 1944. His estate (plaintiff) became involved in a dispute with the government (defendant) concerning whether each of the three interests constituted includible property for estate-tax purposes. The trust provided for an annual income payment of $5,000 to Hill’s wife and $12,000 to his daughter. One interest was the estate’s right to annual excessive net income during the life of the trust. Between 1919 and 1943, Walter had received more than $228,000 from that source, and he or his estate received another $24,000 between 1944 and 1947. Actuarial tables indicated a projected life of the trust of about another 32 years after Walter’s death, and after projected earnings were noted and a discount applied to present worth, that amount of includable estate-tax property could be estimated. A second contingent interest was that on the death of the wife or daughter, that share of annual income, less any amounts needed to administer the trust, should be returned to Walter or his estate. Walter’s estate contended that these sums were incapable of valuation and thus should not be included in his estate. The government argued that while the amount needed to administer the trust was somewhat speculative, the deaths of the wife and daughter could be projected by the actuarial table, and the sums should be included. Finally, the third interest was a contingent reversion on final termination of the trust, which was contingent on the daughter having no surviving issue. Evidence indicated that the daughter was 35 and married and already had a daughter of her own. Once again, the estate argued that such an interest was so remote as to be incalculable and should not be included in Walter’s estate for estate-tax purposes.