INSURANCE-REINSTATEMENT-\u27\u27INSURABILITY

lnsured took out a policy of life insurance with defendant company which contained a clause providing for reinstatement within five years after default on presentation of evidence of insurability satisfactory to the company and payment of overdue premiums with interest. After default in payment of premiums, insured requested reinstatement. The insured had taken up aviation in the interval between issuance of the policy and the request for reinstatement. The company agreed to reinstate on condition that the insured would agree to a modification of the policy, so that it would not cover death resulting from operation of any kind of airplane. The insured was killed in a plane crash. The beneficiaries contend that the meaning of the term insurability is no broader than good health and since the insured was in good health at the time he applied for reinstatement, there is no consideration for his agreement to modify the policy. Held, judgment for beneficiary reversed. The existence. of serious hazards not present when the insurance was taken out will normally justify an insurer\u27s refusal to reinstate on grounds of lack of insurability. Schiel v. N.Y. Life Ins. Co., (9th Cir. 1949) 178 F. (2d) 729

TAXATION-STOCK DIVIDENDS AS INCOME

X corporation had two classes of stock outstanding. The Class A stock was a preferred stock entitled to cumulative dividends and a liquidation preference. The Class B stock was a non-voting stock, entitled to an annual $2 dividend after payment of the dividend on the preferred. Both classes were entitled to participate equally (on a pro rata basis) in any dividends in excess of the two mentioned above. The corporation declared a stock dividend, entitling each Class A holder to one-half share of Class A stock for each share presently held, and each Class B holder to one-half share of Class B stock for each share presently held. Petitioner held both Class A and Class B shares. Held, the dividend constituted income as to both the Class A and Class shares received. If the issuance of a stock dividend affects a change in the proprietary interests of the holders of the stock of the other class, then the dividend is income. Weigand v. Commissioner, 14 T.C. 136 (1950.

FEDERAL ESTATE AND GIFT TAXATION-ADEQUACY OF CONSIDERATION IN TRANSFERS CONNECTED WITH DIVORCE PROCEEDINGS OR SEPARATION AGREEMENTS

Today it is common procedure for a husband and wife, contemplating divorce or separation, to make an advance agreement concerning alimony and division of their property. Often this agreement will be adopted by the court in its decree of separation or divorce. It is the purpose of this comment to discuss the estate and gift tax consequences of such agreements. In order to understand properly the problems which have come up in connection with gift tax liability, it is necessary first to chart out the path taken under the estate tax

TAXATION-STOCK DIVIDENDS AS INCOME

X corporation had two classes of stock outstanding. The Class A stock was a preferred stock entitled to cumulative dividends and a liquidation preference. The Class B stock was a non-voting stock, entitled to an annual $2 dividend after payment of the dividend on the preferred. Both classes were entitled to participate equally (on a pro rata basis) in any dividends in excess of the two mentioned above. The corporation declared a stock dividend, entitling each Class A holder to one-half share of Class A stock for each share presently held, and each Class B holder to one-half share of Class B stock for each share presently held. Petitioner held both Class A and Class B shares. Held, the dividend constituted income as to both the Class A and Class shares received. If the issuance of a stock dividend affects a change in the proprietary interests of the holders of the stock of the other class, then the dividend is income. Weigand v. Commissioner, 14 T.C. 136 (1950.

FEDERAL ESTATE AND GIFT TAXATION-ADEQUACY OF CONSIDERATION IN TRANSFERS CONNECTED WITH DIVORCE PROCEEDINGS OR SEPARATION AGREEMENTS

Today it is common procedure for a husband and wife, contemplating divorce or separation, to make an advance agreement concerning alimony and division of their property. Often this agreement will be adopted by the court in its decree of separation or divorce. It is the purpose of this comment to discuss the estate and gift tax consequences of such agreements. In order to understand properly the problems which have come up in connection with gift tax liability, it is necessary first to chart out the path taken under the estate tax

INSURANCE-REINSTATEMENT-\u27\u27INSURABILITY

lnsured took out a policy of life insurance with defendant company which contained a clause providing for reinstatement within five years after default on presentation of evidence of insurability satisfactory to the company and payment of overdue premiums with interest. After default in payment of premiums, insured requested reinstatement. The insured had taken up aviation in the interval between issuance of the policy and the request for reinstatement. The company agreed to reinstate on condition that the insured would agree to a modification of the policy, so that it would not cover death resulting from operation of any kind of airplane. The insured was killed in a plane crash. The beneficiaries contend that the meaning of the term insurability is no broader than good health and since the insured was in good health at the time he applied for reinstatement, there is no consideration for his agreement to modify the policy. Held, judgment for beneficiary reversed. The existence. of serious hazards not present when the insurance was taken out will normally justify an insurer\u27s refusal to reinstate on grounds of lack of insurability. Schiel v. N.Y. Life Ins. Co., (9th Cir. 1949) 178 F. (2d) 729