                        T.C. Memo. 2001-206



                      UNITED STATES TAX COURT



   ESTATE OF MARY CATHERINE IX GAYNOR, DECEASED, PAUL GAYNOR,
            ADMINISTRATOR d.b.n.c.t.a., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1640-00.                      Filed August 6, 2001.



     Patrick J. Corcoran, for petitioner.

     Michael P. Breton, for respondent.



                        MEMORANDUM OPINION


     SWIFT, Judge:   Respondent determined a deficiency of

$600,513 in petitioner’s Federal estate tax.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect as of the date of decedent’s
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death, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

     After settlement of some issues, the issue remaining for

decision is whether predeath transfers of decedent’s property

with a value of $144,400 and made for no consideration were

revocable under Connecticut law and includable in decedent’s

gross estate under section 2038(a)(1).


                            Background

     This case was submitted fully stipulated under Rule 122.

     On June 1, 1996, Mary Catherine IX Gaynor, decedent, died a

resident of Branford, Connecticut.

     On October 7, 1986, approximately 10 years prior to

decedent’s death, decedent executed a general power of attorney

(POA) under the Connecticut Statutory Short Form Power of

Attorney Act (the Act), Conn. Gen. Stat. Ann. secs. 1-42 to 1-56

(West 2000).   In the POA, decedent appointed an attorney and

decedent’s son, Gerald Gaynor, as attorneys-in-fact to act in

decedent’s stead.

     The POA consisted of a standard form POA under Connecticut

law and explicitly authorized decedent’s attorneys-in-fact to act

in decedent’s stead with respect to decedent’s ownership

interests in real estate, chattels and goods, stocks and bonds,

banking, insurance, claims and litigation, personal relationships
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and affairs, military pensions, records, reports and statements,

and “all other matters”.

     The POA did not explicitly authorize decedent’s attorneys-

in-fact to make gifts of decedent’s property.

     Under the Act, attorneys-in-fact are not explicitly

authorized to make, or prohibited from making, gifts of a

principal’s property.

     Section 1-55 of the Act provides that the words “all other

matters” in a POA indicate that the principal authorized “the

agent to act as an alter ego of the principal with respect to any

matters and affairs not enumerated in sections 1-44 to 1-54a,

inclusive, and which the principal can do through an agent.”

     In 1995 and 1996, decedent’s attorneys-in-fact made for no

consideration transfers of decedent’s property with a value of

$144,400.    The evidence does not indicate to whom the transfers

were made.

     As stated, on June 1, 1996, decedent died.

     On February 28, 1997, decedent’s Federal estate tax return

was filed by the administrator of the estate, a resident of

Connecticut.   On the return, the $144,400 value of the

transferred property was not included in decedent’s gross estate.

     Respondent determined that the above transfers of decedent’s

property constituted revocable transfers under Connecticut law
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and that the $144,400 value of the property should be included in

decedent’s gross estate.


                            Discussion

     For Federal estate tax purposes, all interests in property

that a decedent possesses at the time of death are includable in

the gross estate.   Sec. 2033; Estate of Jalkut v. Commissioner,

96 T.C. 675, 678 (1991).

     Also, the value of property transferred by a decedent prior

to death without consideration and with respect to which a

decedent retains a power to revoke the transfer is includable in

the decedent’s gross estate.    Sec. 2038(a)(1); Estate of Swanson

v. United States, 46 Fed. Cl. 388, 391 (2000).

     The legal effect of gifts of property made under a POA is

controlled by State law.   Morgan v. Commissioner, 309 U.S. 78, 80

(1940); Estate of Swanson v. United States, supra.    In the

absence of a decision or interpretation of State law by a State’s

highest court, we look to lower State court rulings and holdings.

Commissioner v. Estate of Bosch, 387 U.S. 456, 465 (1967).

     The Supreme Court of Connecticut has not addressed whether

attorneys-in-fact are authorized under the Act to make gifts of

their principal’s property without express language in the POA

authorizing gifts to be made.   This issue, however, has been

involved in three opinions of the Connecticut Superior Court,

Judicial District of Hartford-New Britain.
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     In Wosczyna v. Estate of Antone, 1994 WL 411298, at *2

(Conn. Super. Ct. July 26, 1994), in a declaratory judgment

action to quiet title to an interest in real property (on motion

for summary judgment to void a transfer made for no consideration

by an attorney-in-fact), the court quoted the following language

of the Act:


     “In a statutory short form power of attorney, the
     language conferring general authority with respect to
     real estate transactions shall be construed to mean
     that the principal authorizes the agent: * * * (2) to
     sell, to exchange, to convey either with or without
     covenants, to quit claim, * * * or otherwise to dispose
     of, any estate or interest in land * * *”


With no further analysis, the Connecticut Superior Court

summarily concluded that attorneys-in fact in Connecticut were

not prohibited from making gifts of their principal’s property

and denied the motion for summary judgment.   Id. at *3.

     In Estate of Antone v. Staphos, 1994 WL 669694, at *2 (Conn.

Super. Ct. Nov. 17, 1994), a subsequent case involving the same

underlying facts as those involved in Wosczyna, the Connecticut

Superior Court acknowledged that the Act might be interpreted to

authorize attorneys-in-fact to make gifts of their principal’s

property.   Upon further consideration, however, the Connecticut

Superior Court specifically concluded that, absent express

language in a POA to the contrary, the Act does not authorize
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attorneys-in-fact to make gifts of their principal’s property.

Id. at *3.

     The Connecticut Superior Court noted that most courts that

have considered this issue have concluded that under general POAs

attorneys-in-fact do not have the authority to make gifts of

their principal’s property.   Id. at *2; see also King v. Bankerd,

492 A.2d 608, 612 (Md. 1985) (and the numerous cases from Alaska

to Utah cited therein); 3 Am. Jur. 2d, Agency, sec. 31 (Supp.

2000).

     In discussing the extensive case authority on this issue,

the Connecticut Superior Court emphasized the following policy

considerations that have been recognized:   An attorney-in-fact

owes to the principal the highest duty of loyalty; gifts of a

principal’s property generally will be adverse to the interests

of the principal; and, if a principal wished to make a gift of

property, the principal could do so on his or her own.   Estate of

Antone v. Staphos, supra at *3; King v. Bankerd, supra at 613.

     In Estate of Antone, the Connecticut Superior Court noted

expressly that the broad, “catchall” language in the Act (such as

“otherwise to dispose of”) should not be interpreted to convey a

power to make gifts of a principal’s property.   See also Aiello

v. Clark, 680 P.2d 1162, 1165-1166 (Alaska 1984).
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     As a result of the above legal analysis, the Connecticut

Superior Court in Estate of Antone, denied a motion for summary

judgment.

     Thereafter, the above cases were consolidated for trial and

opinion on the legal issue as to whether attorneys-in-fact were

authorized to make gifts under the Act and on the factual issue

as to whether the attorney-in-fact violated his fiduciary duty to

his principal by making the gifts.    Wosczyna v. Estate of Antone,

1996 WL 434261 (Conn. Super. Ct. July 17, 1996).   In its opinion,

the Connecticut Superior Court did not decide the legal issue and

simply held that the attorney-in-fact had acted in his own self-

interest, had violated his fiduciary duty of loyalty to his

principal, and that the gift was revocable.   Id. at *4.

     Petitioner contends that since the broad language of the Act

authorizes attorneys-in-fact to act as “alter egos” of their

principals, decedent’s attorneys-in-fact herein were implicitly

authorized under the Act to make gifts on decedent’s behalf, and

therefore that the $144,400 value of decedent’s transferred

property need not be included in decedent’s gross estate.

     Respondent contends that the Act and the POA neither

explicitly nor implicitly authorize decedent’s attorneys-in-fact

to make gifts on decedent’s behalf, and respondent contends that

until decedent’s death the transfers of decedent’s property were

revocable by decedent.
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     Absent express language in a POA providing otherwise and

particularly in light of Estate of Antone v. Staphos, supra, and

the persuasive analysis contained therein, we believe that the

Supreme Court of Connecticut would conclude that under the Act a

general POA does not include the power to make an irrevocable

transfer of a principal’s property without consideration.

     On brief, petitioner alleges that decedent expressly

authorized and intended decedent’s attorneys-in-fact to make

gifts of decedent’s property and that under Estate of Pruitt v.

Commissioner, T.C. Memo. 2000-287, and Estate of Bronston v.

Commissioner, T.C. Memo. 1988-510, the transfers made by

decedent’s attorneys-in-fact should be treated as irrevocable

gifts.

     In Estate of Pruitt and Estate of Bronston, we concluded

that Oregon and New Jersey law, respectively, did not necessarily

prohibit attorneys-in-fact from making gifts in appropriate

circumstances, and we held that the POAs in those cases contained

express language broad enough to authorize the attorneys-in-fact

to make irrevocable gifts.   In those cases, the taxpayers also

established that the decedents intended for their attorneys-in-

fact to continue with a pattern of gift giving that had been

established by the taxpayer and that the attorneys-in-fact had

not committed fraud, abuse, or self-dealing with respect to the
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gifts.   Estate of Pruitt v. Commissioner, supra; Estate of

Bronston v. Commissioner, supra.

     Even if our interpretation of Connecticut law is mistaken

and the Supreme Court of Connecticut would allow under general

POAs gifts to be made by attorneys-in-fact, the evidence in the

instant case does not indicate that decedent herein had

established a pattern of gift giving or that decedent intended to

give a POA that included the power to transfer decedent’s

property without consideration.

     We conclude that prior to her death decedent retained the

power under Connecticut law to revoke the transfers of the

property with a value of $144,400.       Under section 2038(a)(1), the

value of that property is to be included in decedent’s estate.

     To reflect the foregoing,

                                              Decision will be entered

                                         under Rule 155.
