Bullen v. State of Wisconsin
Headline: Court upholds Wisconsin inheritance tax on nearly $1 million trust fund held in Chicago after its owner reserved a broad power to revoke and control, making his heirs liable for the tax.
Holding: The Court held that Wisconsin could tax the entire trust fund because the owner reserved a broad power to control and revoke it, so the transfer was treated as taking effect at his death.
- Allows states to tax trust assets when the owner keeps broad control or revocation powers.
- Makes heirs liable for inheritance tax on the full fund in the decedent’s domicile.
- Out-of-state-held securities can be taxed by the decedent’s home state for inheritance purposes.
Summary
Background
George Bullen, a Wisconsin resident who formerly lived and did business in Chicago, conveyed nearly a million dollars of bonds, stocks, and notes to a Chicago trust company in 1902 and again in 1907. The trust instrument gave small sums to a sister and niece in Massachusetts, allowed one-third of income to his widow for life, and left the remainder to his four sons. Crucially, Bullen expressly reserved the right to direct, control, revoke, reconvey, and take possession of the trust property and he received all the income during his life. He also made a will of similar tenor that was not probated.
Reasoning
The core question was whether Wisconsin could tax the whole fund as a transfer that takes effect in enjoyment after the donor’s death. The Court agreed with the Wisconsin Supreme Court that Bullen’s broad, exercisable power to control and revoke the trust made the disposition essentially equivalent to outright ownership for tax purposes. The Court noted the deeds were real transfers with purpose, that Bullen had exercised his reserved powers, and that treating the power as a fee for the taxing statute did not violate the Constitution. The opinion also observed that Illinois had taxed the fund but did not undercut Wisconsin’s treatment.
Real world impact
This ruling means a state can treat a large trust as taxable when the settlor keeps broad lifetime control and revocation powers, making heirs liable for inheritance tax in the decedent’s domicile state. The Court declined to address a separate point about deducting an Illinois tax because that issue was not raised in the state appeal.
Ask about this case
Ask questions about the entire case, including all opinions (majority, concurrences, dissents).
What was the Court's main decision and reasoning?
How did the dissenting opinions differ from the majority?
What are the practical implications of this ruling?