Blodgett v. Silberman

Background

A Stamford, Connecticut man, Robert B. Hirsch, died in 1924 leaving a large estate. The people managing his will probated the estate in New York, paid New York taxes and legacies, and later sought probate and tax accounting in Connecticut. Major assets included a large partnership share in William Openhym & Sons (appraised at $1,687,245.34), stocks, U.S. bonds and Treasury certificates kept in a New York safe-deposit box, a New York savings account, a life insurance policy payable to the estate, and a small amount of cash in New York.

Reasoning

The central question was whether Connecticut could tax transfers of these assets because the deceased lived in Connecticut even though many papers or items were in New York. Connecticut’s high court treated the partnership interest as an intangible taxable at the decedent’s home state but held that the U.S. bonds and Treasury certificates were tangible in New York and not taxable by Connecticut. The U.S. Supreme Court agreed that the partnership interest, stock certificates, the savings account, and the life policy were intangibles taxable by the decedent’s domicile. It reversed the Connecticut court only as to the U.S. bonds and Treasury certificates, ruling they remain choses in action (intangible evidence of debt) and so can be taxed by the decedent’s home state. The Court treated the small cash sum in the New York box as tangible property not taxable by Connecticut.

Real world impact

The ruling means a person’s home state can generally tax many kinds of financial assets even when the written evidence or the papers are kept in another State. Physical items or cash actually located elsewhere remain taxable only where they are located. Estate administrators and heirs must account for potential taxation by the deceased’s home state on intangibles, and the Court rejected the claim that Connecticut had failed to give full faith and credit to New York’s probate proceedings.