In the case of Helvering, Commissioner of Internal Revenue v. Grinnell, Executor (1934), the U.S Supreme Court was tasked with determining whether or not a trust fund established by an individual before death could be included in their gross estate for tax purposes after they passed away. The decedent had transferred securities into a trust and retained income from it during his lifetime but relinquished all control over its principal amount. After his death, the IRS sought to include this trust's value in calculating estate taxes owed by arguing that he had retained "possession or enjoyment" of these assets as per Section 302(c) of the Revenue Act of 1926. However, upon review, the court ruled against this interpretation stating that since he did not have any power over disposition nor received any benefits from it other than fixed income during his life; therefore such property cannot be considered part of his gross estate posthumously.

In the dissenting opinion of the Supreme Court case Helvering v. Grinnell, Justice Cardozo disagreed with the majority's decision to allow a deduction for estate tax purposes of an amount paid by a decedent during his lifetime as part of a settlement agreement in divorce proceedings. He argued that such payments should not be considered debts and thus deductible from gross estate under Section 303(a)(1) of the Revenue Act because they were voluntary obligations arising out of family or personal relationships rather than legally enforceable debts. According to him, if Congress had intended to include such payments within its definition of "claims against the estate," it would have done so explicitly. Furthermore, he contended that allowing this interpretation could open up possibilities for abuse where wealthy individuals might seek to reduce their taxable estates through similar arrangements.