Taxation – Federal Estate Tax – Interpretation of “In Fact” Clause of Section 2036 and Deductibility of Support Rights of Wife

Having decided to separate, but desiring to avoid the publicity of a judicial proceeding, decedent and his wife executed an agreement which called for the transfer of securities to a trust, the income of which was to be paid to the wife for her life or until her remarriage, with a reversionary interest in the decedent. In consideration for the transfer, the wife relinquished her right to support by the decedent. Both parties were represented by attorneys in the arms-length negotiations leading to the agreement. About six years after the separation, during which time neither party took steps to procure judicial sanction for the arrangement, the decedent died unexpectedly. The Commissioner included the trust corpus in the gross estate of the decedent under section 811 (c) (1) (B) of the 1939 code and denied a deduction from the gross estate for the value of the support rights of the wife under authority of section 811 (i) and section 812 (b). The Tax Court sustained the Commissioner’s position. Section 811 (c) (1) (B) applies despite the fact that the decedent did not intend to retain possession and enjoyment of the property for a period which would extend beyond his death. Also, support rights of a wife are embraced within the meaning of “other marital rights” in section 812 (b). Estate of Robert M. McKeon v. Commissioner, 25 T.C. 697 (1956).