Morton v. United States

Quin Morton (plaintiff) was covered by a life-insurance policy. The policy was purchased by his father-in-law, who wished to provide financial security for his daughter, Mrs. Morton. Morton never paid the premiums and never considered that he owned it. The premiums were first paid directly by the father-in-law, then by a corporation owned by Mrs. Morton and her sister, and then by Mrs. Morton, until Morton passed away in 1963. The government (defendant) included the proceeds of the life-insurance policy in Morton’s estate. The estate sued, and the trial court ruled that Morton did not possess any of the incidents of ownership (factors that would point toward control or dominion over the policy) of the insurance policy, which mandated its exclusion from his gross estate. In 1938, Morton had signed an endorsement of the policy, which created an irrevocable designation of beneficiaries and mode of settlement. By designating a beneficiary irrevocably, which was permitted under the terms of the policy, Morton relinquished numerous rights, including changing the beneficiaries, surrendering the policy for cash value, utilizing the policy to obtain a loan, or handling dividends of the insurance policy. Morton’s estate argued on appeal that he lacked the powers that were incidents of ownership to include the policy in his estate. The government disputed this but also argued that Morton had the power to act in conjunction with others to exercise the powers that were incidents of ownership.