Taxation – Inheritance Tax – Transfers Subject to Take Effect at or After Death

Decedent was a participant in a company profit-sharing savings and retirement trust. Under the terms of the plan, the company made deposits with a trustee on an annual basis and relinquished the right to recapture or impair the fund for its own use or benefit. The contributions were to be held for ten years with accrued interest, and then were to be distributed to the employees in three annual instalments. Should an employee leave the company, he was entitled to his share in three instalments; in the event of retirement or illness he was to receive his entire share in one lump sum. The employer was also entitled to name a beneficiary to receive his share of the fund in the event of his death. Decedent’s daughter, as the designated beneficiary, contended that there was no property interest in the decedent, no inter vivos transfer, and, therefore, no transfer intended to take effect in “possession or enjoyment at or after death” under the Michigan inheritance tax statute. The probate court determined that there was tax due on the amount paid to the daughter, and the circuit court affirmed. On appeal, held, affirmed. By naming a beneficiary during his life, the decedent shifted to her substantial economic benefits which would come into complete enjoyment at the time of his death. Such a transfer is within the terms of the inheritance tax statute. In re Brackett Estate, 342 Mich. 195, 69 N.W. (2d) 164 (1955).