In the United States v. Estate of Donnelly et al., 1969, the Supreme Court was tasked with deciding whether a federal estate tax lien could be enforced against property that had been transferred by a decedent before his death. The decedent, prior to his death, had transferred all his assets into an irrevocable trust for the benefit of his children and retained no interest in or control over those assets. After he died, it was discovered that he owed substantial amounts in unpaid income taxes. The IRS sought to recover these from the trust's assets arguing that they were part of the gross estate under Section 2038(a)(1) of Internal Revenue Code because power existed at time of transfer "to alter, amend or revoke" but this power ceased due to death. The court ruled against IRS stating that there must be some retained beneficial interest or control by donor over transferred property at time of death for it to be included in gross estate; mere cessation due to death is not enough as per statute language and legislative history interpretation.

In the dissenting opinion for United States v. Estate of Donnelly, the justice disagreed with the majority's interpretation of Section 2036(a) of the Internal Revenue Code. The justice argued that this section was not intended to apply to cases where a decedent had transferred property but retained an income interest for life. Instead, they believed it should only apply when there is a transfer with a retained right or condition that affects full enjoyment of the property by transferees until death occurs. They also pointed out inconsistencies in previous court rulings on similar issues and expressed concern about potential negative impacts on estate planning practices if such transfers were included in gross estates for tax purposes.