## Facts

- Albert Meyer owned two life-insurance policies with settlement options providing monthly payments rather than lump-sum proceeds.
- Each policy required monthly payments to Meyer’s wife for life, with a guarantee of 240 monthly payments (20 years).
- If the wife died before 20 years elapsed, Meyer’s daughter would receive the remaining guaranteed monthly payments until the end of the 20-year period.
- The insurers recorded (i) an amount to fund the guaranteed 240 payments and (ii) an amount to fund payments to the wife if she lived beyond 240 months.
- The executors claimed an estate tax marital deduction for the actuarially determined portion attributed to the wife’s potential post-20-year payments.
- The IRS denied the marital deduction and included the full value of the policies in the taxable estate.
- The district court allowed the deduction; the Second Circuit reversed; the Supreme Court affirmed the denial.

## Issues

1. Whether the proceeds of each policy could be treated as two separate “properties” so that the wife’s actuarially determined post-20-year payment component qualified for the marital deduction under I.R.C. § 812(e) (1939).
2. Whether the wife’s interest was a nondeductible “terminable interest” because the daughter could enjoy part of the same policy proceeds if the wife died within the 20-year guarantee period.

## Decision

- The Supreme Court affirmed the Second Circuit’s judgment denying any marital deduction for the policy proceeds.
- The Court held the proceeds of each insurance policy constituted a single “property” for § 812(e) purposes.
- The wife received a terminable interest because her interest could terminate (by death within 20 years) and the daughter could then enjoy part of the same property.
- Actuarial or bookkeeping segregation by the insurers did not convert one property into two separate properties, and did not permit a partial marital deduction.

## Legal Principles

- For the marital deduction under I.R.C. § 812(e) (1939), an interest is nondeductible if it is a terminable interest and, upon its termination, another person may possess or enjoy any part of the same property.
- Insurance proceeds payable under a single settlement arrangement are treated as a single “property” even if insurers allocate reserves between guaranteed-period payments and potential life-contingent payments.
- A marital deduction cannot be preserved by carving out, through actuarial valuation, a component of a single property when a third party has a contingent right to enjoy part of that property upon the spouse’s earlier death.

## Conclusion

The Court denied the estate tax marital deduction because each policy’s proceeds were a single property and the wife’s right to payments was a terminable interest, given the daughter’s contingent right to receive remaining guaranteed payments if the wife died within the 20-year period.


Meyer v. United States, 364 U.S. 410 (1960)