Coolidge v. Long

1931-02-24

Headline: Massachusetts law taxing inheritances cannot be applied to trust interests that vested before the tax, so the Court reversed and blocked the state from collecting the excise on those beneficiaries.

Holding: The Court ruled the Massachusetts inheritance excise could not constitutionally be imposed on beneficiaries when their rights to possession and enjoyment vested before the tax, reversing the state court and invalidating the tax as applied.

Real World Impact:

Stops Massachusetts from collecting this excise on these vested trust remainders.
Protects beneficiaries whose rights vested before a tax's effective date.
May limit many states’ use of similar inheritance taxes on preexisting trusts.

Topics: inheritance tax, trusts and estates, state tax limits, contract protections

Summary

Background

In this case trustees asked a Massachusetts probate court to cancel an inheritance tax assessed after a trust was created in 1907. The trust gave income to the husband and wife during their lives, then the principal to their five sons. The settlors could not revoke the trust, and the sons’ remainder interests were treated as vested when the deeds took effect; the parents died in 1921 and 1925. Massachusetts later enforced a statute that taxed property passing in possession or enjoyment after death.

Reasoning

The high court addressed whether the state law could tax successions that had already vested under a prior contract. The majority held the sons’ rights to possession and enjoyment had vested when the trust was created, so the state could not, consistent with the Constitution, impose the later excise. The Court therefore reversed the state court and barred the tax as applied, citing the contract clause and due process protections. The Court relied on past decisions treating vested remainders as property rights protected from later legislative impairment.

Real world impact

Because the trusts here were made before the tax, beneficiaries avoid the Massachusetts excise in these cases. The decision limits a state’s ability to reach vested trust remainders with after‑enacted inheritance taxes. The opinion points out that many states have similar laws, so the ruling could affect many pending or future assessments.

Dissents or concurrances

A dissent argued the state law was a valid tax on the privilege of coming into possession and enjoyment and that the state courts’ interpretation should stand; it emphasized long practice, many supporting cases, and that many states use similar tax language.