Citation. Best v. United States, 902 F. Supp. 1023, 96-1 U.S. Tax Cas. (CCH) P60,223, 79 A.F.T.R.2d (RIA) 1092 (D. Neb. May 12, 1995)
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Brief Fact Summary.
Plaintiff Kathleen Best (Plaintiff), Personal Representative of the Estate of Deceased Alma Anderson (Decedent) and daughter of Deceased, moves for summary judgment and claims a refund for a federal estate tax payment, with interest, for an Internal Revenue Service (IRS) deficiency assessment. Plaintiff argues that the trust corpus should not be included in Decedent’s estate. The United States (Respondent) argues that the trust corpus is includable.
Plaintiff, pursuant to an IRS tax deficiency assessment, paid federal estate taxes (and interest) on the corpus of a trust that had been established for Decedent’s benefit. Plaintiff argues that the trust corpus should not be included in the estate of Decedent and therefore challenged the IRS deficiency assessment. The trust had been established by Decedent’s husband to provide for the reasonable comfort, support, and maintenance. Upon Decedent’s death, the corpus of the trust was distributable to Decedent’s children, Kathleen Best and John Anderson, or to their heirs. Plaintiff contends that the testamentary trust under the will of Decedent’s husband conferred an invasionary power limited by an ascertainable standard so that the corpus of the testamentary trust estate is excludable from the gross estate of Decedent. Respondent argues that a general power of appointment over the trust corpus was conveyed by the will trust and that therefore the value of the trust was includabl
e in Decedent’s gross estate.
Did the IRS properly include in the gross estate of Decedent the corpus of a trust over which the Decedent had merely an invasionary power limited by an ascertainable standard?
No. The motion for summary judgment should be granted. The language in trust related to the wife’s comfort, support, and maintenance confers an invasionary power limited by an ascertainable standard. The use of the word “comfort” is limited by the term “required” and therefore implies more than the minimum necessary for mere survival, but nevertheless only what is reasonably necessary to maintain the Decedent in her accustomed manner of living. Therefore, Decedent did not have a general power of appointment over the assets of the testamentary trust. Because of this, the IRS should not have included the value of the trust corpus in the wife’s gross estate.