Curry v. McCanless

Background

A Tennessee woman placed stocks and bonds in an Alabama trust administered by an Alabama trust company. She kept the income in her lifetime and reserved the power to change the trustee and to dispose of the trust by will; when she died the trust property passed under her will. Both Alabama and Tennessee tax officials asserted the right to collect death or inheritance taxes on that property. A Tennessee chancery court sided with Alabama; the Tennessee Supreme Court held the property taxable only in Tennessee, prompting an appeal.

Reasoning

The main question was whether one or both states could constitutionally tax the same intangible interests. The Court said intangibles are tied to persons and legal relationships, not just paper, and that the domicile of the decedent and the location of the trustee each give legitimate bases for taxation. The Court rejected a rule that the Fourteenth Amendment forces every intangible to have a single physical “situs” for taxation and reversed the Tennessee Supreme Court’s denial of Alabama’s authority to tax.

Real world impact

States can assert tax claims both where trust assets are kept and where the decedent lived, so people who create interstate trusts, trustees, and beneficiaries may face overlapping state inheritance or transfer taxes. The ruling broadens state taxing reach in multi-state trust arrangements and resolves a conflict in favor of allowing both states’ interests to be recognized.

Dissents or concurrances

Justice Reed largely joined but reserved a point about corporate taxation. Justice Butler emphasized that legal title and control were in Alabama and argued Tennessee lacked power to tax the securities, reflecting a narrower view of where intangibles are taxed.