DocketNumber： Docket No. 16924
Citation Numbers： 13 T.C. 5, 1949 U.S. Tax Ct. LEXIS 134
Judges： Murdock
Filed Date： 7/6/1949
Status： Precedential
Modified Date： 11/14/2024
*134
Estate Tax -- Jointly Held Property -- Money Consideration --
*5 The Commissioner determined a deficiency in estate tax in the amount of $ 6,617.66. The only question for decision is whether the interest which the decedent's spouse had in certain jointly held property had been acquired*135 from the decedent for a full and adequate consideration in money or money's worth within the meaning of
FINDINGS OF FACT.
The decedent died on April 25, 1945, while residing in Massachusetts. He was then 80 years of age. The estate tax return was filed with the collector of internal revenue for the district of Massachusetts.
The decedent and his wife Hattie were married in 1893. They had one child, a son, born in 1895. He died in 1931.
The decedent was engaged in the painting business at the time he was married. He had high blood pressure and was extremely nervous and difficult to get along with all of his life. He had been receiving frequent massages in an effort to quiet his nerves. Physicians advised him to give up his business and to give up smoking in order to improve his health. He sold his business and his residence in 1897 and moved to South Harwich, Cape Cod. He never engaged in any business thereafter, except to invest the $ 26,000 realized from the above sales, and the accretions thereto, which was his entire estate. He did a little gardening on the Cape.
He realized that he and his family would have to live frugally. *136 He felt he needed but could not afford to hire a nurse, so he told his wife that he would pay her $ 12.50 a week if she would "take care of him to the end" and she agreed. The agreement was never evidenced by a writing.
The decedent and his family moved to Somerville in 1929 and continued to live there until the decedent's death.
*6 The physician who saw the decedent on an average of about 4 or 5 times a year during the last 11 years of his life diagnosed his extremely nervous and irritable condition as due to high blood pressure. His physical health was not good during that period and he was in bed on several occasions, due to a sacroiliac condition. He was generally able to be up and about the house. He was placed in an institution shortly before his death, suffering from arteriosclerotic dementia.
The decedent demanded and received a great deal of attention from his wife. She massaged, bathed, and shaved him daily, did his errands, and took care of him whenever he needed care, either during the day or at night. She had a nurse to assist her only on infrequent occasions and then for short periods, the longest period being seven weeks, when she was injured. She also *137 did the housekeeping with the aid of one person employed by the day when needed.
The decedent not only lived off the income from his investments, but increased his capital of $ 26,000 in 1897 to, on one occasion, more than $ 120,000. He became disgusted with the securities market in 1929 and decided to liquidate his holdings and place his funds in savings accounts under his name and his wife's, jointly, as follows:
| 1929 | $ 5,000.00 |
| 1932 | 410.00 |
| 1933 | 3,557.50 |
| 1934 | 4,795.00 |
| 1935 | 7,675.00 |
| 1936 | 7,085.00 |
| 1937 | 8,700.00 |
| 1938 | 530.00 |
| 1939 | 8,400.00 |
| 1940 | 2,000.00 |
| Total | $ 48,152.50 |
He had never paid his wife anything on account of the $ 12.50 per week he had promised her and he said that one-half of the joint accounts would be hers in accordance with that promise.
The decedent withdrew $ 28,000 from the joint accounts in 1940 and invested it in savings and loan shares in their names, jointly, and about $ 1,000 which he invested in real estate as tenants by the entirety.
The decedent executed his will in 1931. He told his wife in 1929 that he was going to make his will and that having their funds in joint accounts would facilitate handling them in case one should die.
The*138 Commissioner, in determining the deficiency, made the following adjustments in relation to jointly held property:
| Description | Returned | Determined |
| 50 Prospect St., Melrose, Mass | $ 3,250.00 | $ 6,500.00 |
| Co-Operative Bank Shares | 3,500.00 | 7,000.00 |
| Federal Savings and Loan Shares | 10,500.00 | 21,000.00 |
| Savings Bank Deposits | 9,704.05 | 19,408.09 |
The full values of the jointly owned property are included in the gross estate since the decedent contributed the entire purchase price and the surviving joint owner did not contribute anything which was acquired from the decedent for a full and adequate consideration in money or money's worth, within the intendment of
*7 OPINION.
The Commissioner contends that an agreement on the part of a wife to take care of her husband would be null and void under the laws of Massachusetts, and for this and other reasons the petitioner has failed to show that the wife acquired her interest in the jointly held property from the husband for a full and adequate consideration in money or money's worth within the meaning of
The petitioner argues that the wife was under no legal obligation to render such services as she actually rendered to her husband, and that the performance of those services by her constituted an adequate and full consideration in money or money's worth for her acquisition of an equal interest with her husband in the property held jointly at the time of his death. The contract was never reduced to writing and the record does not show in detail just what understanding the parties had. There is some evidence to indicate that the decedent never intended to pay his wife anything during his lifetime, but merely intended to leave her something under his will to compensate her for the care which she had given him. Actually he did not pay her anything during*140 the first 32 years, and then he merely placed some money in joint bank accounts. There is nothing to indicate that the wife ever regarded those deposits as receipt of income taxable to her. However, the petitioner must fail in this case, even though the record shows that there was a definite agreement under which the decedent was to pay his wife $ 12.50 a week during her life and the deposits in the joint accounts were fulfillments of his promise.
Services performed by a wife under a marriage contract do not represent consideration in money or money's worth within the meaning of