Circumstances taken into account
1. Age and state of health of the decedent at the time of
the gift, especially where he was aware of serious
illness.
2. Length of time between the gift and the date of death.
3. Concurrent making of a will or making a will within a
short time after the transfer.
Motives associated with life
1. To relieve the donor from the burden of management
2. To save income or property taxes
3. To settle family litigated and unlitigated disputes
4. To provide independent income for dependents
5. To see the children enjoy the property while the donor
is alive
6. To protect family from hazards of business operartions.
7. To rewards services rendered
Transfer with retention or reservation of certain rights
This contemplates those cases where the owner transfers
his property during life but still retains the economic benefits. By
reason of the restriction or encumbrance, the transferee is
incapable of freely enjoying or disposing of the property until the
transferor’s death, that the transfer may be regarded as having
been intented to take effect in possession or enjoyment at the
transferor’s death.
Property Covered by the transfer
1. Transfer without retention of interest, but effect
postponed
- Intended to take effect in possession or
enjoyment at or after his death.
2. Transfer with retention of interest to income or with
right to designate persons who will enjoy income or
property.
a. The possesion or enjoynment of the or right to
the income from the property.
b. The right either alone or in conjunction with any
person, to designate the persons who shall
possess or enjoy the property or the income.
3. Transfer with reversionary interest
- A possibility that the transferred property may
return to the decedent or his estate or that it
may become subject to a power of disposition
by the decedent.
-
Manner of postponing possession of property transferred
1. Postponement provided in a separate agreement
2. Deed to be delievered or registered on grantor’s death
3. Evidence of intention to postpone
Revoocable Transfers
1. With reserved power to alter, etc.
2. With such power relinquished
When power to alter, etc. considered to exist
The power to alter, amend or revoke shall be considered to
exist on the date of the decedent’s death eventhough:
1. The exercise of the power is subject to a precedent
giving of notice
2. The alteration, amendment or revocation takes effect
only on the expiration of a stated period after the
exercise of power.
Transfer of property under general power of appointment
1. By will
2. By deed executed in contemplation of or intended to
take effect in possesion or enjoyment at or after his
death
3. By deed under which he has retained for his life or any
period not ascertainable withour reference to his death
or for any period which does not in fact end before his
death.
Requisites for taxability of the property
1. The existence of a general power of appointment
2. An exercise such power by the decedent by will or by
deed in certain cases.
3. The passing of the property by virtue of such exercise
Source of Appointed Property
The property passing under a general power of
appointment comes from the donor and the donee.
For purposes of estate tax,the power to dispose of property
at the death by the exercise of a power of appointment is the
equivalent of ownership. It is a potential source of wealth to the
appointee and the disposition of wealth effected by its exercise or
reliquishment at death is one form of the enjoyment of wealth.
General power distinguished ffrom special power
1. A power is general when in authorizes the donee of the
power to appoint any person he pleases thus having as
full dominion over the property as though he owned it.
2. It is special when the donee can appoint only among a
restricted or designated class of persons other than
himself.
Transfers for insufficeint consideration
1.If any one of the transfers, interest, rights or powers
enumerated is made for a consideration in money or money’s worth
but is not a bona fide sale for an adequate and full consideration in
money or money’s worth, the excess of the fair market value of the
transferred property at the time of death over the value of the
consideration received, shall be included in the gross estate.
2. If the purported absolute sale inter vivos by the
decedent is shown to be fictitious, then the total value of the
property transfred its subject to inclusion in the taxable estate.