17 T.C. 597">*597 The tax liability involved in Docket No. 19480 is for estate tax deficiency in the amount of $ 840,467.79. In Docket No. 20519, there is involved transferee liability for the same deficiency. The proceedings were consolidated for hearing, and it was stipulated at the hearing that if it be determined in the principal proceeding there is a deficiency in the estate tax, there will be a corresponding liability in the transferee proceeding.

The questions for our determination are whether the value of certain trusts created by the decedent's husband, John J. Newberry, in 1934 and 1935 are includible in the decedent's gross estate and, if so, whether the income accrued thereon and undistributed at the decedent's death is includible in her gross estate. Other issues raised by the1951 U.S. Tax Ct. LEXIS 68">*70 pleadings have been conceded by the parties.

17 T.C. 597">*598 These proceedings were submitted on a stipulation of facts and oral evidence. The stipulation of facts are so found and are incorporated herein by this reference. They may be epitomized as follows, along with facts that are found from the oral evidence.

FINDINGS OF FACT.

The decedent, Myrtle H. Newberry, died on May 9, 1944, a resident of New Jersey.

On the date of the decedent's death there were in existence eight inter vivos trusts, of which four were created by John J. Newberry, the decedent's husband, and four were created by the decedent, as follows: On each of the dates July 6, 1934, and December 26, 1935, the decedent and her husband John J. Newberry each created two trusts, one in favor of their daughter, Myrtle Virginia, and the other in favor of their son, John J., Jr.

The corpus of each of the trusts as originally created consisted primarily of an equal number of shares of stock of the John J. Newberry Co.

The language of the eight trusts was substantially the same, save for the differences in names and certain immaterial variations. Hereinafter when reference is made to the exact language of the trusts, or any1951 U.S. Tax Ct. LEXIS 68">*71 amendments thereto, it will be taken from the John J. Newberry Trust No. 1.

Trust No. 1, dated July 6, 1934, named John J. Newberry as grantor and John J. Newberry and his wife, the decedent, as trustees. The trust instrument provided, in part, as follows:

WHEREAS the Grantor is desirous of securing an income for his daughter MYRTLE VIRGINIA NEWBERRY during her life by creating a trust for said purpose, * * *

* * * *

SIXTH: The Trustees shall accumulate the entire net income of the Trust Fund * * * for the benefit of MYRTLE VIRGINIA NEWBERRY, the daughter of John J. Newberry, until she shall arrive at twenty-five years of age, at which time the Trustees are directed to pay said accumulated net income and thereafter the entire net income of the Trust Fund in quarterly installments to said Myrtle Virginia Newberry during her life.

* * * *

FOURTEENTH: The Trustee Myrtle H. Newberry shall have the power at any time during her life by instrument in writing delivered by her to the Trustees to modify, alter, amend or revoke this instrument in whole or in part including the right to change the beneficiaries herein, provided, however, she shall not have power to revest the securities deposited1951 U.S. Tax Ct. LEXIS 68">*72 herein, or which may be hereafter deposited herein or the Trust Fund in John J. Newberry, the Grantor, and provided, further, that she may not revest the principal or income in the Grantor John J. Newberry.

* * * *

17 T.C. 597">*599 EIGHTEENTH: Should any of the Trustees hereinbefore designated resign his or her trust or die before the Trust is completely executed, then the surviving Trustee or Trustees may appoint and nominate a successor Trustee to the one who has resigned, or become incapacitated to carry out the duties of Trustee, or may have died, and the Trustee so nominated upon qualifying by signifying his acceptance in writing to the other Trustee or Trustees, shall succeed to all the rights, powers and discretions of the other Trustee or Trustees hereinbefore granted, excepting that no such succeeding Trustee shall have the power of modifying, altering, amending or revoking this instrument in whole or in part, or of changing the beneficiaries herein, excepting that any succeeding Trustee nominated by the Trustee John J. Newberry to succeed Myrtle H. Newberry as Co-Trustee, or to succeed the Trustee who shall have succeeded Myrtle H. Newberry, shall during the life of John J. Newberry1951 U.S. Tax Ct. LEXIS 68">*73 have the right to alter, amend, or revoke this instrument in whole or in part, including the right to change the beneficiaries herein, provided, however, that at no time shall such succeeding Trustee have the power to revest the securities deposited herein or which may hereafter be deposited herein, or the Trust Fund in the Grantor John J. Newberry.

* * * *

The provision included in the trusts to modify, alter, amend or revoke the instruments was inserted because the named beneficiaries were very young, in school, and neither the decedent nor her husband knew what kind of lifemates they (the beneficiaries) might choose. The trust was to continue until the death of the survivor of Myrtle Virginia, the daughter, and her mother, the decedent. If the mother survived the daughter, on the daughter's death the income was to be paid to the daughter's children and the issue of a deceased child or children in equal shares, but if the daughter died leaving no children or issue of deceased children, the net income was to be paid to the decedent during her life. On the termination of the trust either on the death of Myrtle Virginia or of the decedent, the "principal of the said trust fund" 1951 U.S. Tax Ct. LEXIS 68">*74 was payable to the daughter's children and the issue of deceased children, and if there were none, to the daughter's brother or to his issue, and if he left no issue to the grantor's sisters and the issue of any deceased sister, and if there were no sisters or issue of deceased sisters then "to the next-of-kin of Myrtle Virginia Newberry as determined by the statutes of New Jersey."

On six different dates the decedent and her husband executed 16 pairs of practically identical amendments, or a total of 32 amendments to or partial revocations of the trust instruments. Paragraph Sixth was amended on November 30, 1942, as follows:

SIXTH: The Trustees shall accumulate the entire net income of the Trust Fund * * * for the benefit of MYRTLE VIRGINIA LEACH, the Daughter of John J. Newberry, until she shall arrive at thirty years of age, at which time the Trustees are directed to pay said accumulated net income and thereafter the entire net income of the Trust Funds in quarterly installments, to said Myrtle Virginia Leach, during her life.

17 T.C. 597">*600 Paragraphs Fourteenth and Eighteenth above mentioned were amended on May 31, 1943, as follows:

Fourteenth. Myrtle H. Newberry shall have the1951 U.S. Tax Ct. LEXIS 68">*75 power at any time during her life, by instrument in writing delivered by her to the Trustees, to change the beneficiaries herein, provided, however, that such beneficiaries shall be either the descendants of Myrtle H. Newberry, spouses of such descendants or donees described in Section 812 (d) of the U. S. Internal Revenue Act of 1939. ¹ Said Myrtle H. Newberry shall not have power to vest the securities deposited herein or which may be hereafter deposited herein or the trust fund in John J. Newberry, the Grantor, and provided further that she may not revest the principal or income in the Grantor, John J. Newberry.

* * * *

Eighteenth. Should any of the Trustees hereinbefore designated, resign his or her Trust or die before the trust is completely executed, then I appoint WALTER C. BAKER and THOS. L. ZIMMERMAN, JR., as successor Trustees, in the order named, to the one who has resigned or become incapacitated to carry out the duties of the Trust, or may have died, and the Trustees so nominated, upon qualifying by signifying his acceptance in writing to the other Trustee or Trustees, shall succeed to all the rights, powers and discretions of the other Trustee or Trustees hereinbefore1951 U.S. Tax Ct. LEXIS 68">*76 granted. Should the said WALTER C. BAKER or THOS. L. ZIMMERMAN, JR., resign his trust or become incapacitated to carry out the duties of Trustee, or die before the trust is completely executed, then and in either of those events, I appoint my son, JOHN J. NEWBERRY, JR., in place of the one whose office of Trustee is vacated and upon the death, resignation or incapacity or failure to qualify of the said John J. Newberry, Jr. or his co-trustee, I appoint the Guaranty Trust Company of New York City as co-trustee, with the surviving individual Trustee, and such corporate Trustee shall have all the rights, powers and discretions of the other Trustee. Upon the resignation, death or incapacity to serve, of the said individual Trustee, The Guaranty Trust Company is empowered to act as sole Trustee of this trust. The Trustees are granted and given by the Grantor the amplest and fullest power to enable them to carry into effect and to accomplish the purposes of the trust created herein.

By the May 31, 1943, amendment the life of Myrtle H. Newberry, the decedent, was dropped out as the measure of the duration of the trusts and the contingent life estate of the decedent was eliminated. 1951 U.S. Tax Ct. LEXIS 68">*77 The trusts as amended were to terminate upon the death of Myrtle Virginia plus 21 years, or upon the death of the last survivor of her husband, her brother, and John J. Newberry, the settlor, plus 21 years, whichever event should later occur. If Myrtle Virginia should die prior to the death of the survivor of the three named individuals, the income was to be payable to Myrtle Virginia's children and the issue of any deceased child or children, but if she should leave no issue, the income was to be payable to her brother for his life and upon his death to his issue, and should he leave no issue, then to the grantor's sisters and the issue of a deceased sister. If Myrtle Virginia should survive the 17 T.C. 597">*601 other three, the income was payable for 21 years to Myrtle Virginia's children and the issue of deceased children, or in the absence of such, to the issue of her brother, and should he have no issue to the settlor's sisters and the issue of any deceased sister. On the termination of the trust the "principal of said trust fund" was to be payable to Myrtle Virginia's issue, and should she leave no issue, then to the issue of her brother, John, and should he leave no issue, then 1951 U.S. Tax Ct. LEXIS 68">*78 to the grantor's sisters or the issue of any deceased sister, and should there be none "to the next-of-kin of Myrtle Virginia Newberry as determined by the statutes of New Jersey."

On May 31, 1943, John J. Newberry and his wife, Myrtle H. Newberry, the decedent, resigned as trustees and were replaced by one Walter C. Baker and one Thomas L. Zimmerman, Jr.

John J. Newberry was born September 26, 1877, and Myrtle H. Newberry, the decedent, was born November 14, 1876. John J. Newberry and Myrtle H. Newberry had two children, John J. Newberry, Jr., born July 13, 1914, and Myrtle Virginia Newberry, born June 10, 1918. John J. Newberry, Jr., was married on October 5, 1940, and on May 9, 1944, the date of the decedent's death, he had one child, John J., III, born on November 17, 1941, and another child, Haidee Jane, who was in being but not born until1951 U.S. Tax Ct. LEXIS 68">*79 November 10, 1944. Myrtle Virginia Newberry (now Mrs. Philip F. Leach) was married on April 19, 1941, and on May 9, 1944, she had two children, Robin Virginia and Suzanne Gene born on March 16, 1942, and August 25, 1943, respectively.

John J. Newberry, as the named settlor of the four John J. Newberry Trusts, filed Federal gift tax returns with the collector of internal revenue at Newark, New Jersey, reporting as a taxable transfer the transfer, respectively, of the corpus of each trust, and duly paid gift taxes in respect to such transfers. Myrtle H. Newberry, the decedent, as the named settlor of the four Myrtle H. Newberry Trusts, filed Federal gift tax returns with the collector of internal revenue at Newark, New Jersey, reporting as a taxable transfer the transfer respectively of the corpus of each of such trusts and duly paid gift taxes in respect to such transfers. The aggregate amount of gift taxes which John J. Newberry paid on account of the transfers made by him was something over $ 80,000.

The idea of creating these trusts was first suggested to John J. Newberry by his brother, his business associate. After discussing the matter with his brother, John J. Newberry called1951 U.S. Tax Ct. LEXIS 68">*80 in his attorney, with whom he discussed a plan that his brother had suggested. After John J. Newberry had the idea of creating the trusts "pretty well" fixed in his mind and shortly after he had first discussed it with his attorney he discussed it with his wife. He and she usually talked over matters as important as the trusts. They always handled the affairs of the 17 T.C. 597">*602 family mutually. When decedent joined her husband and the attorney in the discussions she said that

* * * if it was a good thing to create these trusts, if John thought it was a good thing to create these trusts for the children, she did, too. She thought it was an excellent idea, and she wanted to do the same thing. She wanted to create the same type of trusts.

He suggested the trust idea to her; she was interested right away and thought it was a good plan. Her purpose in creating her two 1935 trusts was the same as his. The decedent never gave any indication that she might not possibly execute the trusts. John J. Newberry took the initiative in formulating the plans for the trusts. The 1934 trusts were all executed at about the same time at decedent's home. In 1935 she and her husband viewed their1951 U.S. Tax Ct. LEXIS 68">*81 circumstances and felt they could transfer more stock into trusts. The trust instruments were drawn by the attorney on directions from John J. Newberry. The attorney was acting for Myrtle H. Newberry when he drew the Myrtle H. Newberry Trusts.

The Newberry children at the time of the creation of the trusts in 1934 and 1935 had no independent means of their own. They were very young and the decedent and her husband did not know what kind of lifemates they might choose. They had a great interest in the children and wished to protect their interest. The decedent always wanted to protect the children. That was the main interest of her and her husband. The trusts were made principally to turn over income to the children and the parents wished it to be for their benefit. The purpose of the power given the decedent was to provide against unforeseen contingencies because the children were young and the parents were looking forward to the time when they might be married and wanted to be able to protect their -- the parents' -- interest in the event that the children might marry schemers or ne'er-do-wells. That was the purpose of wanting to control the trusts.

On May 9, 1944, the undistributed1951 U.S. Tax Ct. LEXIS 68">*82 accumulated income of the John J. Newberry Trusts held by the trustees was as follows:

On the books of account maintained by the trustees of each of the four trusts the aforesaid accumulated income was not credited to the principal amount of the trusts, but invariably was carried in a special account entitled "Accumulated Income."

By petition dated September 30, 1946, the executors of the decedent's estate instituted a proceeding in the Bergen County Orphans' Court, 17 T.C. 597">*603 New Jersey, asking the court to construe the John J. Newberry Trusts Nos. 1, 2, 3, and 4 as to the extent of the powers of Myrtle H. Newberry over the income accumulated under the provisions of the trust agreements, and to enter a decree determining whether or not the accumulated income was corpus or whether it vested in the beneficiary and whether the decedent had power to transfer accumulated income prior to her death, to others than the named beneficiary. The Bergen County Orphans' Court on January 23, 1947, duly appointed a guardian ad litem of the children and unborn children1951 U.S. Tax Ct. LEXIS 68">*83 of Myrtle Virginia, the primary beneficiary under the John J. Newberry Trusts Nos. 1 and 3. A memorandum in support of the petition was filed with the Orphans' Court on behalf of Myrtle Virginia and John J., Jr., and a memorandum in opposition was filed by the guardian ad litem on behalf of the children and unborn children of Myrtle Virginia. The matter was heard by Judge Herman Vanderwart of the Bergen County Orphans' Court on March 6, 1947, and on May 29, 1947, Judge Vanderwart entered an order declaring that the accumulated income as and when received by the trustees vested in the life tenants, and that the decedent, Myrtle H. Newberry, at no time had any power to change the beneficial enjoyment of such accumulated income.

OPINION.

On July 6, 1934, the decedent as the named grantor executed two instruments of trust, one in favor of her daughter and the other in favor of her son. On the same day her husband as the named grantor executed two instruments of trust, one in favor of his daughter and the other in favor of his son. Each did the same again on December 26, 1935. The language of the eight trusts was substantially the same, save for the differences in names and certain1951 U.S. Tax Ct. LEXIS 68">*84 immaterial variations. The corpus of the trusts as originally created consisted primarily of an equal number of shares of stock of the John J. Newberry Co. Each of the eight trust instruments named the decedent and her husband as trustees. As originally drawn, the trust instruments provided, in accordance with certain conditions, for a contingent life estate in the net income to be paid to the named grantor's spouse. Paragraph Fourteenth of each trust instrument, as originally drawn, provided that the spouse of the named grantor as "trustee" was given the power to alter, amend or revoke the instrument in whole or in part, including the right to change the beneficiaries.

The respondent argues that trusts which are subject to the grantor's power either to change the beneficiaries or shift their interests because of a reserve power to alter or amend are includible in the gross estate of the grantor under section 811 (d) (2), Internal Revenue Code. The decedent was not the named grantor of the trusts here 17 T.C. 597">*604 involved but the respondent argues that the decedent and her husband executed their respective trusts in consideration of the other's doing so, and each must be regarded1951 U.S. Tax Ct. LEXIS 68">*85 as the true grantor of the other's instruments. Lehman v. Commissioner, 109 F.2d 99, affirming 39 B. T. A. 17, certiorari denied 310 U.S. 637">310 U.S. 637.

As to the provisions for contingent life estates the petitioners contend that since these were eliminated, by the amendments in 1943, before death of the decedent, they are not to be considered here. The respondent apparently agrees for he does not touch the point or, in his brief filed after receipt of that of petitioners, reply to petitioners' view on the matter. In any event, we agree with the petitioners in that respect. Obviously "at the date of his [her] death" in the words of section 811 (d) (2), Internal Revenue Code, there were no contingent life estates in existence. We do not however agree with the petitioners that only the date of death is to be considered in determining whether there was reciprocity in the trusts. The history of the trusts from the beginning must be examined and, indeed, the petitioners do so, in contending that decedent's husband would have executed his trust regardless as to whether decedent executed another.

Since1951 U.S. Tax Ct. LEXIS 68">*86 we conclude that, except for study of the problem whether there was reciprocity of trusts, the date of death is crucial, it follows that in view of the amendments made on May 31, 1943, the only matter left for consideration is whether there lies in the provision, common to the trusts of decedent and her husband, that Myrtle H. Newberry [in her husband's trust as amended] has the right to change beneficiaries (limited to her descendants, their spouses or donees, under section 811 (d) of the 1939 Code), a situation which, under section 811 (d) (2) of the Revenue Code, requires inclusion of the value of trust corpus in decedent's estate.

The petitioners contend that the doctrine of reciprocal trusts rests upon the principle that the decedent must have parted with, and received from the other trust, a beneficial property right as an inducement for the creation of the cross trusts, and the power to change beneficiaries, petitioners say, is not such beneficial property right. One simple answer to this proposition is that the decedent parted with her interest in the shares of stock contributed to the trusts created naming her as grantor. It is clear that she parted with this much of her1951 U.S. Tax Ct. LEXIS 68">*87 estate, for there was included in her trust instruments a provision that such corpus could not be revested in her. Within the same arguments, petitioners go further to contend that each spouse must part with the same amount of property, and in developing this point to their ultimate conclusion eventually get to the view that the power received must be equal to the property right given up. Petitioners cite Cole's Estate v. Commissioner, 140 F.2d 636, and certain dictum in Hanauer's 17 T.C. 597">*605 v. Commissioner, 149 F.2d 857, as supporting such a conclusion. As we read these two cases, the meaning appears clear that they stand only for the proposition that to be reciprocal trusts the amount of any property contributed, by the respective grantors, must be of equal amount and if not equal then the amount includible in the decedent's gross estate can not exceed the amount contributed in creating the smaller trust; in other words, the reciprocal trust doctrine extends only to equal amounts contributed to the creation of the trusts. We find no support in the cited cases for petitioners' theory that the power 1951 U.S. Tax Ct. LEXIS 68">*88 received by the decedent in trust must be a property right of ascertainable value, or that the reciprocal powers here, to change beneficiaries, are not sufficient to bring this matter within the doctrine of reciprocal trusts. Moreover, we have in principle otherwise decided. In Werner A. Wieboldt, 5 T.C. 946, much as here, a husband and wife each created a trust naming their children as beneficiaries, with power in the other to alter, amend or terminate the trust and to direct the trustee as to trust properties. Essentially the same argument was made as here, that is, that the reciprocal powers were nonbeneficial to the holders. We said:

* * * The significant factor is that each settlor gave the other the right to alter, amend, or terminate the trust. Such power, though not exercisable for the benefit of the grantor, otherwise seems to be a general one. However, it is argued by petitioners that it was exercisable only in a fiduciary capacity and not to the advantage or benefit of the holder. Even if this be so, it remains that the power did carry with it, at least, the right to increase or diminish the beneficial interests of the respective named1951 U.S. Tax Ct. LEXIS 68">*89 beneficiaries. As a matter of fact, the respective indentures were altered in that respect. If either grantor had retained such power, along with the right to direct the trustee with respect to the sale, retention, or reinvestment of trust property, although as a trustee, he would have been subject to tax on the income under Stockstrom v. Commissioner, 148 Fed. (2d) 491. Certainly the effect of that case may not be circumvented by a simple expedient on the part of a husband and wife of exchanging the rights with each other.

While it may be true that neither petitioner had any beneficial interest in either of the trusts and that each of them was motivated to create a trust by a desire to provide for his (her) children, the power and control over the distribution of income and principal and the power to direct the management of the trust properties, although lost to each under his own indenture, were regained under the indenture of the other. In the circumstances of this case, it might well be that such rights were the most satisfying ones to the petitioners. Certainly they are among the important attributes of property ownership.

The Wieboldt1951 U.S. Tax Ct. LEXIS 68">*90 case was, of course, one involving income, not estate tax. But the principle of reciprocal trusts applies equally to estate tax and income tax. Margaret Batts Tobin, 11 T.C. 928 (945), reversed in part 183 F.2d 919, on the facts, but not on the above statement. Clearly there is not in this respect real distinction in the doctrine 17 T.C. 597">*606 in the difference between estate tax and income tax. It has been applied in case of gift tax. Commissioner v. Warner, 127 F.2d 913.

The essential consideration here is that, if the power to change beneficiaries had been reserved in decedent's own trust, there could be no doubt that the case would fall under section 811 (d) (2) and, therefore, the trust corpus fall within gross estate; and the result is the same if there are crossed trusts, exchanging the same power, so that there is in substance transfer by the decedent. Lehman v. Commissioner, supra. As we said, in an income tax case involving reciprocal trusts: "What petitioner lost by the transfer to the trust created by her for Smith's benefit she recovered1951 U.S. Tax Ct. LEXIS 68">*91 as beneficiary of Smith's trust." Purdon Smith Whiteley, 42 B. T. A. 316 (321). Under such principle it appears clear that it is not necessary that the reciprocated powers be beneficial, or constitute a quid pro quo in the sense of equivalency in value, as petitioners contend. In fact, there appears here clear equivalency, in the fact that the crossed powers were the same, involving properties of identical value, that is, equal amounts of the same stock.

The petitioners also argue that the transfers here in question have been held to be outright gifts by this Court in John J. Newberry and Myrtle H. Newberry, 39 B. T. A. 1123. Even if the point is of any consequence, here, it does not appear that either party to that case contended that the trusts created by the decedent and her husband were outright gifts, thereby making such an issue before the Court. As we read that case, the only question there decided was the fair market value on the date of each gift of the block of John J. Newberry Co. stock which was the subject of that gift. The transfers may have been gifts and still not settle the estate question here 1951 U.S. Tax Ct. LEXIS 68">*92 to be decided. See section 813 (a), Internal Revenue Code. Petitioners, on brief, also contend that the decedent and her husband intended to make outright gifts to their children. Such a contention is not borne out by the decedent's and her husband's actions in the creation of the trusts. Each was given a significant power in the other's trust. The power in the original instrument was set out in paragraph Fourteenth, wherein the decedent as "trustee" was given the power to alter, amend, or revoke the instrument in whole or in part including the right to change the beneficiaries. Also, from later action on the part of the decedent and her husband, it is apparent that it was the intention of the grantor that this provision was to include the power to vest the corpus of the trusts in the decedent, for, at a later date, on May 31, 1943, the paragraph was amended in such a way that the decedent's power was limited to changing the beneficiaries to either the descendants of Myrtle H. Newberry (the decedent herein), spouses of such descendants or donees described in section 812 (d) of the 17 T.C. 597">*607 Revenue Act of 1939. The insertion of such a limitation by an amendment leads us to believe1951 U.S. Tax Ct. LEXIS 68">*93 that before the amendment, it was the intention of the decedent and her husband that the corpus of the trusts could be vested in the named grantor's spouse, at the discretion of such spouse. Paragraph Fourteenth as it originally appeared was inserted because the named beneficiaries were very young, in school and neither the decedent nor her husband knew what kind of mate they (the beneficiaries) might choose. The significance of the amendment to paragraph Fourteenth is magnified because they (the decedent and her husband) did not execute it until May 31, 1943, a date at which time the named beneficiaries (the decedent's and her husband's children) were both married and both had children (one each).

Significant also is the fact that the respective pairs of trusts, in point of time, were executed on the same day and were similar in terms. The decedent and her husband on six different dates executed 16 pairs of practically identical amendments, or a total of 32 amendments to or partial revocations of the trust instruments. It is evident that the decedent and her husband were acting as a unit.

As was said in Joseph Nussbaum, 19 B. T. A. 868 (871), and1951 U.S. Tax Ct. LEXIS 68">*94 reiterated in Ernest J. Keefe, 15 T.C. 947 (953), "The situation must be viewed as a whole." Viewing the situation as a whole it is apparent that outright gifts were not made and that the trust instruments were merely part of an interdependent arrangement whereby neither the decedent nor her husband would lose control of the amount of stock of the John J. Newberry Co. transferred to the trusts until they saw fit to do so.

The petitioners next argue that the named grantor's spouse must have been the generating force in initiating the creation of the cross trust in order to justify its inclusion in the decedent's gross estate. They argue that this is purely a factual question and that courts have recognized and applied this limitation upon the doctrine of reciprocal trusts, citing Hanauer's Estate v. Commissioner, supra;In re Lueders' Estate v. Commissioner, 164 F.2d 128; Marrs McLean, 41 B. T. A. 1266; affirmed on this point 127 F.2d 942. We find nothing in the Hanauer case that gives substance to the petitioners' argument. 1951 U.S. Tax Ct. LEXIS 68">*95 The circuit court of appeals there found, as the Tax Court had previously found, that the decedent and his wife had each created his or her trust in consideration of the other. This the court thought was sufficient to justify the application of the reciprocal trust doctrine and therefore cause the trust to be included in the gross estate of the decedent. As we read the case, it does not establish a necessary prerequisite for inclusion of a trust under the reciprocal trust doctrine, nor does it give reason to any theory that the trusts in the instant case are free from being within such doctrine. In fact, the facts in the Hanauer's Estate17 T.C. 597">*608 case, under which the court found such reciprocity of trusts as to cause inclusion of trust property in gross estate, are remarkably parallel to those here involved; for it is there, in substance, recited that the wife when informed of her husband's plans for his trust decided that if such plan was good enough for him it was good enough for her; and here the decedent said that "if John thought it was a good thing to create these trusts for the children, she did too. * * * She wanted to create the same type of trusts." That mental1951 U.S. Tax Ct. LEXIS 68">*96 attitude was relied on in the cited case; and we think it important here in the decision that there was reciprocity.

In Orvis v. Higgins, 180 F.2d 537, the court considered testimony generally similar to that here as to independence of action of husband and wife, but reversed and found reciprocity of trusts, saying, as to the reasons given by husband and wife:

* * * Not only were those respective reasons strikingly similar but none of them sufficed or purported to explain why each of the trusts set up a life estate; nor did the expression of those reasons at all negative the existence of an intent to make the trusts reciprocal. * * *

Here, too, we do not think the evidence relied on by petitioners explains why each set up the provisions which were reciprocal. The Lueders' Estate case, above mentioned, is distinguishable in that it was there stipulated that the trust created by the decedent's husband was on its face a prima facie gift. The contrary is true in the instant case. As above noted, we have concluded that the trusts here involved were not intended to be outright gifts to the two children. Petitioners so argue, but, as above1951 U.S. Tax Ct. LEXIS 68">*97 seen, we are unable to reach that conclusion. The power given to the decedent in the trusts convinces us that the trusts were not intended to be outright gifts. The Marrs McLean case involved gift taxes. There the taxpayer presented his case on a stipulation to which was attached copies of the transfers in trust. Neither the transfers nor the stipulation contained any statement that the transfer by the taxpayer was in consideration of the transfer by his wife or vice versa. Taxpayer was attempting to prove that trusts executed simultaneously by husband and wife were made in consideration of each other. The court there said:

* * * Taxpayer may not by merely pointing to the fact that; the trusts were created at the same time; were in equal amounts; and contained reciprocal provisions, claim a discharge of the burden resting on him to show that the transfers were made in consideration of each other. * * *

In other words, there the taxpayer failed to prove his case. It appears that petitioners, in the instant case, would have us use that case as an authority for the principle that if consideration is not proved then the trust agreements cannot be considered reciprocal but1951 U.S. Tax Ct. LEXIS 68">*98 such a conclusion, in our view, would merely be relieving the petitioners of the burden of 17 T.C. 597">*609 proving their case. It is clear that the case does not stand for the principle that the named grantor's spouse must have been the generating force in initiating the creation of the cross trust in order to justify its inclusion in the decedent's gross estate. Petitioner also cites Estate of Lindsay, 2 T.C. 174, as an authority for the principle that the execution of the trusts on the same day and in similar terms is of no materiality when the record shows that outright gifts were intended to be made and were made. The petitioners argue that the idea of creating the trusts in the Lindsay case (trusts were created by the husband and wife) did not originate with either spouse but with the son of the grantors and contend that John J. Newberry's brother stands in a similar position in the instant case in that the idea of creating the trusts originated with him (the brother). At least one material difference makes the Lindsay case inapplicable, for in the Lindsay case the son conferred independently with his mother and father, the named grantors, 1951 U.S. Tax Ct. LEXIS 68">*99 while in the instant case John J. Newberry's brother conferred only with John J. Newberry, the husband, and John J. Newberry discussed the plan with his wife (decedent herein). In the Lindsay case the respondent at trial disavowed intent to depend on the reciprocal trust theory, and suggested it only on brief. We found independence of the two trusts on all the facts. Further, as above seen, the record here does not justify our finding the trusts constituted outright gifts. In our view, the decedent does not need to be the generating force in creating the cross trusts in order to justify their inclusion in her gross estate, for in reality it takes trusts created by two individuals (e. g., trusts created by both husband and wife) to give rise to the reciprocal trust arrangement and it matters not which was the generating force or merely acquiesced in the arrangement if, as here, both trusts are equally a part of the reciprocal arrangement. In Cole's Estate, supra, the court in concluding that there was reciprocity in trusts, despite the argument as to motive, said:

* * * Further, "* * * with few exceptions the law attaches legal consequences to1951 U.S. Tax Ct. LEXIS 68">*100 what parties do, quite independently of their private purpose or intent." Richardson v. Smith, 2 Cir., 102 F.2d 697, 699, 125 A. L. R. 774. * * *

The parties here involved did create trusts with reciprocal provisions.

The petitioners' final argument is that where the testimony of record contains unrebutted evidence negativing a state of facts on which the respondent's case must be based, mere speculation will not be allowed to do duty for probative facts. But the testimony on the point is by no means the whole record. It is our view that under all of the evidence, and not merely the testimony petitioners rely on, the trusts in question were a part of an interdependent reciprocal arrangement and that the decedent in substance and reality was the grantor of the trust in which her husband was the named grantor. Having concluded that the decedent 17 T.C. 597">*610 was in substance the grantor, it follows that the value of the corpus of the trusts is includible in her gross estate under the provisions of section 811 (d) (2), Internal Revenue Code, because it was property in which she retained the power, for life, to change the beneficiaries. Porter v. Commissioner, 288 U.S. 436">288 U.S. 436;1951 U.S. Tax Ct. LEXIS 68">*101 Chickering v. Commissioner, 118 F.2d 254, certiorari denied 314 U.S. 636">314 U.S. 636; Commissioner v. Hager's Estate, 173 F.2d 613; Estate of Grace D. Sinclaire, 13 T.C. 742.

The above conclusion requires us to answer the second question propounded: Whether certain income from the trust corpus, accumulated "for the benefit of" Myrtle Virginia Newberry [or John J., Jr.] until she arrived at 30 years of age, at which time the trustees were to pay it to her, vested, as the petitioners argue, at the time of accumulation in her, though it was not to be paid until later, so that the decedent having died before Myrtle Virginia became 30 years of age, decedent died with no such power over such accumulated income as to cause it to be included in gross estate. The respondent argues, contra, in substance, that the decedent at the time of her death had power "to change the beneficiaries" so that the accumulated income is includible in decedent's gross estate. The executors, acting under section 3:7-77 of the Statutes of New Jersey, petitioned the Orphans' Court to construe1951 U.S. Tax Ct. LEXIS 68">*102 the trust agreements and to enter a decree determining whether or not the accumulated income is corpus or whether it vested in the beneficiary, and whether the decedent had power to transfer accumulated income prior to her death, to others than the named beneficiary; and upon such petition they secured an order declaring that the accumulated income vested in the beneficiary and that the decedent had no power to change the beneficial enjoyment thereof. Petitioners urge that such order is conclusive here. The respondent urges that the Orphans' Court had no jurisdiction to construe a trust. After examination of the question and the cases cited by both parties, we conclude that the Orphans' Court did not have jurisdiction to construe the trust, and that that power is reserved in New Jersey to the Chancery Court. Though the petitioners argue that the application was made by executors, not trustees, and that under the New Jersey statute above mentioned "any executor * * * may * * * apply by petition to the orphans' court of the county wherein letters were granted to him, for its advice and direction in regard to any matter or thing in connection with the administration of his trust" 1951 U.S. Tax Ct. LEXIS 68">*103 upon which the Orphans' Court may make an order, we note that in the case of In re Roth's Estate, 52 A.2d 811, the matter before the court came on upon the application of executors, one of whom was also entitled to the net income of the testamentary trust and the other of whom was a trustee who asked the Orphans' Court 17 T.C. 597">*611 for an order "instructing the said executors in the premises." The court held that the Orphans' Court "lacked jurisdiction to instruct the Roth trustees how they should execute their trust and therefore the decree must be set aside." It was stated that the legislature could not impair the jurisdiction of chancery by giving another tribunal jurisdiction of a subject matter which at the time of the adoption of the state constitution belonged exclusively to chancery, and In re McConnell's Estate, 149 A. 352">149 A. 352, is cited. The McConnell case involved a petition to establish a resulting trust and the Orphans' Court was held to be without jurisdiction. We note that the court said that the Orphans' Court had power to decide any question incidental to the termination of any issue over which it has jurisdiction, 1951 U.S. Tax Ct. LEXIS 68">*104 and said that it might well be that in the determination of an account the statutory court might have passed upon the question, but that the petition put in issue but one question, whether a certain party held property in trust or in his own right. We, therefore, again notice that in the Roth case the original petition by the person entitled to net income of the trusts prayed for opening of decrees allowing accounts, and the other petition by the other trustee and executor merely asked for instructions. Yet the court held there was no jurisdiction to give such instructions. We conclude and hold that the Orphans' Court of Bergen County, New Jersey, was without jurisdiction to construe the trust before us (which was not a testamentary trust) and that, therefore, its decree of order is not conclusive in this matter.

The petitioners further argue, however, that as a matter of law the income when accumulated vested immediately in decedent's daughter, the beneficiary thereof, and thus was not subject at the time of decedent's death to her power under the trust as amended to change the beneficiaries. The cases cited fail to lay down such rule as to inter vivos trusts and are, 1951 U.S. Tax Ct. LEXIS 68">*105 in substance, merely to the effect that in the various circumstances involving those cases the testamentary provisions were with intent that the income vest in the beneficiary, and that there was vesting at death of the decedent. On the facts before us, in this case, of inter vivos trusts, we think the opposite conclusion is necessary. In the first place, the sixth paragraph of the trust as amended provided for accumulation of income "for the benefit of" Myrtle Virginia Newberry (Leach) [or her brother] and not that it should belong to her, or equivalent expression. It was merely to be accumulated for her benefit. In other words, she was a beneficiary. But paragraph Fourteenth as amended gave the decedent, individually, and she at the time of her death possessed, the power to "change the beneficiaries" from which, under all of the evidence here, it follows that intent and effect was that the income when accumulated did not vest in the child but was subject to change by the decedent -- just as in testamentary trusts in the cases cited the testator could of 17 T.C. 597">*612 course revoke until death. It was clearly, we think, the intent of the reciprocal trusts here to keep control1951 U.S. Tax Ct. LEXIS 68">*106 over the income until the child became 30 years of age. The decedent's husband testified, in substance, that the children were young, that he and his wife wished to protect their interests, that that was their main interest in life, that the purpose was to provide against unforeseen contingencies, that he and his wife were looking forward to the time when the children might be married and they wanted to "protect our interest in the event that they might marry some schemer or some ne'er-do-well, and that was the purpose of wanting to control the trusts. These trusts were made principally to turn over income to our children, and we wanted it to be for their benefit. * * * we did not know who they might marry." We can have no doubt that it was the purpose and intent of the father and mother to protect their children and the trust income from any unworthy son-in-law or daughter-in-law who might come into the picture and inherit from their daughter or son, in case of death before the age of 30 was reached. Nothing indicates to us that the protection was to be limited to trust corpus alone. On the contrary, the language above quoted is affirmative that the trusts "were made principally1951 U.S. Tax Ct. LEXIS 68">*107 to turn over income" to the children, and that decedent and her husband had a "purpose of wanting to control the trusts," which can mean nothing less than control primarily over income. The child was a mere beneficiary of the accumulated income and not the owner thereof under the language and intent, as we find it, of the trust instrument. The ownership of such income did not upon accumulation pass beyond the control of the trust, and the child as beneficiary could be supplanted by another by action of the decedent. We, therefore, conclude that the accumulated income did not vest at time of accumulation and that the decedent by virtue of her power to change the beneficiaries had at the time of her death such control under section 811 (d) (2) of the Internal Revenue Code of 1939 as to require inclusion of both accumulated trust income, and corpus, in her gross estate.

Because of concessions made

Decisions will be entered under Rule 50.