# Fahnestock v. Commissioner > United States Tax Court · April 3, 1945 · 4 T.C. 1096 URL: https://www.frixlaw.com/law-library/cases/4479602 ## Case - **Full name:** Estate of Harris Fahnestock, Georgette G. v. Fahnestock, Harris Fahnestock, Jr., and James F. Mimnaugh, Executors v. Commissioner of Internal Revenue - **Court:** United States Tax Court - **Decided:** April 3, 1945 - **Citations:** 4 T.C. 1096; 1945 U.S. Tax Ct. LEXIS 193 - **Precedential status:** Published - **Opinion:** Dissent by Totner - **Judges:** Opper - **Cited by:** 28 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4479602 ## Opinion text TotneR, dissenting: The grants in trust here involved were to certain beneficiaries for life, with remainders to their issue, but in the event they left no issue surviving, the remainders were to go to certain contingent remaindermen, or if they were dead, to their issue; but if they in turn had left no issue surviving, the trust estates were to revert to the grantor. The exact language in two of the trusts is that in such event, “the entire principal of the trust shall revert to the Grantor or to his legal representatives.” while in the other three trusts the provision is, “then to the Grantor; or if the Grantor be deceased to the personal representatives of the Grantor, to be by them distributed to the next of kin of the Grantor * * It thus appears that the decedent, by specific provision in each of the trust instruments, reserved, and at all times held and retained, a possibility of reverter in the principal of each trust, which, according to the pronouncements of the Supreme Court in Helveving v. Hallock, 309 U. S. 106 , requires the inclusion of such trust principal in the decedent’s gross estate. The Supreme Court, in Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U. S. 108 , after discussing the scope of Helvering v. Hallock, supra, and Klein v. United States, 283 U. S. 231 , said: “The taxable gross estate * * * must include those property interests the ultimate possession or enjoyment of which is held in suspense until the moment of the grantor’s death or thereafter.” In that case the interest in the trust property retained by the grantor was not nearly so broad as here. There the grantor reserved only the right to appoint by will the taker of the corpus in the event of the failure of certain contingent remaindermen to survive the life tenants, and if the grantor failed to exercise the power of appointment, the trust estate was to pass to certain charities named in the trust instrument. Holding that the “string or contingent power of appointment” was sufficient, under the statute, to require the inclusion of the trust corpus in the grantor’s gross estate, the Court said: “The ultimate disposition of all the trust property was suspended during the life of the decedent. Only at or after her death was it certain whether the property would be distributed under the power of appointment or as provided in the trust instrument.” Here, as in that case, the preference of the grantor obviously was that the trust property should go to his children and their issue, but, for reasons of his own, he was not willing to make, and did not make a full and complete grant of all his rights and interest in the property to or for their benefit. Instead, he made the vesting of the estate of each and every remainderman contingent upon his (the remainderman’s) surviving the holder of the life estate, retaining for himself a contingent reversion in the principal of each trust, which reversionary interest passed at his death to his personal representatives, and the ultimate disposition of the property — whether it is to go to the remaindermen named in the trust instrument or is to go to the beneficiaries of the decedent’s estate, as provided by his will or the laws of descent and distribution — is suspended until the happening or failure of the contingencies which the decedent by the trust instrument has imposed. If in the Fidelity-Philadelphia Trust Co. case the retained power of appointment was a “string” sufficient to bring the trust corpus into the grantor’s gross estate, then by comparison the reversionary interest retained by the grantor in the instant case approaches the proportions of a rope, or if not a rope, a cord, certainly much stronger than the string in the Fidelity-Philadelphia Trust Co. case. It is accordingly my opinion that the Court here is in error in excluding from the decedent’s gross estate the principal of each of the above trusts, and for that reason I note my dissent. Smith, Leech, and Opper, JJ., agree with this dissent. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4479602. Public record. Not legal advice.