Cahen v. Brewster

Background

A man in New Orleans died in May 1904 leaving a will that made his two nieces his universal heirs and left some money to charities. The estate was inventoried and accounted for in the summer of 1904. Louisiana passed an inheritance tax law on June 28, 1904, after the death but before final distribution. The executors were told the State would collect the tax; the executors and the nieces challenged the tax as unconstitutional and asked the court to block collection.

Reasoning

The main question was whether Louisiana could impose its new inheritance tax on a succession that had been opened by the testator’s death before the law was passed. The Court explained that earlier federal cases define an inheritance tax by its nature but do not fix the exact time a State may collect it. The Court accepted Louisiana law’s view that the State can tax property while it remains in the succession (the estate administration) and before it is finally closed and delivered to heirs. The Court therefore rejected the argument that heirs were automatically immune because they technically acquired the succession at death.

Real world impact

The ruling allows Louisiana to collect the inheritance tax from Levy’s estate, except for United States bonds and the charitable bequests that the judgment excluded. Heirs who received an estate that had not been finally closed when the law took effect may still owe the new tax. The decision affirms that the timing of estate administration can determine tax liability, and it leaves open further challenges in different factual settings.