Merrill v. Fahs: Release of Marital Rights Is Insufficient Consideration for Transfer Tax Purposes
The United States Supreme Court’s 1945 decision in Merrill v. Fahs stands for the proposition that the release of marital rights in exchange for the receipt of property is insufficient consideration to avoid a gift. Therefore, when the husband in that case transferred property to his wife in accordance with the terms of a prenuptial agreement, and the wife released marital rights in exchange for the husband’s transfer, the husband’s transfer was properly classified as a taxable gift. Even though Merrill remains good law, its impact is greatly reduced by legislative changes enacted in the years subsequent to the decision.
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