First Nat'l Bank of Chicago v. Comm'r of Internal Revenue, Docket No. 3584-63.
| Decision Date | 20 July 1965 |
| Docket Number | Docket No. 3584-63. |
| Parties | ESTATE OF WILHELMINA L. BENJAMIN, DECEASED, BY THE FIRST NATIONAL BANK OF CHICAGO, EXECUTOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Mark Crane, for the petitioner.
Kenneth B. Samuels, for the respondent.
Under decedent's will the remainder of her estate was placed in trust with instructions to the trustee ‘To pay over to my husband during his lifetime the entire net income derived from my estate and such amount of the principal thereof as he may from time to time direct.’ Upon the husband's death the remainder of the estate was to be distributed to decedent's nieces and nephews. Held, decedent's husband was given an unlimited power to invade the principal of the trust and the value of the trust qualifies for the marital deduction.
Respondent determined a deficiency in estate tax in the amount of $54,591.32.
The sole issue for decision is whether the residuary trust established under the will of Wilhelmina L. Benjamin qualifies for the marital deduction.
The facts have all been stipulated and the stipulation of facts is incorporated herein by reference.
Wilhelmina L. Benjamin (hereafter referred to as decedent) died testate on June 2, 1960, a resident of Oak Park, Cook County, Ill., at the age of 88 years. Decedent's Federal estate tax return was filed with the district director of internal revenue, Chicago, Ill., on August 14, 1961.
Decedent's last will with codicil was admitted to probate in the Probate Court of Cook County, Ill., on July 12, 1960. The First National Bank of Chicago was appointed executor of decedent's estate by said court on July 12, 1960. The First National Bank also became testamentary trustee pursuant to article Third of decedent's will and article First of the codicil thereto and is presently acting in that capacity.
Decedent and her husband, Bert R. Benjamin (hereafter referred to as Bert), were married on November 25, 1903, and had no children. Decedent was survived by Bert, and by certain nieces and nephews who were descendants of deceased brothers and sisters of the decedent, her only heirs-at-law and next of kin. Bert was 89 years of age on the date of decedent's death.
Decedent and Bert both executed wills in 1937, Bert's having been executed on September 30, 1937, and decedent's on November 16, 1937. Both wills were drafted by the same attorney. Decedent and Bert each executed a codicil to their respective wills in the latter part of November 1958. Both codicils were drafted by the same attorney. Decedent and Bert knew the contents of each other's will and codicil. The will and codicil of decedent mentioned above were the will and codicil admitted to probate.
Decedent's will, after first directing the executor to pay all debts, funeral expenses, and taxes, provided in pertinent part as follows:
Second: I give and bequeath to my beloved husband, Bert R. Benjamin, all articles and effects of personal, domestic, or household use, or ornaments, including automobiles, of which I may die possessed.
Third: All the rest, residue, remainder of my property, real, personal, or mixed, of whatsoever character and wherever situate, of which I may die seized or possessed, or which I may own or have any interest in at the time of my death, I give, devise, and bequeath to James G. Christie, of 180 North Michigan Avenue, Chicago, Illinois, as Trustee, to hold upon the following trusts, to-wit:
(a) To pay over to my husband during his lifetime the entire net income derived from my estate and such amount of the principal thereof as he may from time to time direct.
(b) On the decease of my husband, to pay all the rest, residue and remainder of my estate to my nephews and nieces, the children of my brothers William C. Bergman, Henry G. Bergman, Adolph Bergman, Chris Bergman, Fred H. Bergman and August H. Bergman, all of Newton, Iowa and of my sisters, Dena B. Maytag of Newton, Iowa and Lottie Schnathorst of Moline, Illinois, share and share alike.
(1) If any of my said nephews and nieces should predecease me or should predecease my husband and leave issue him or her surviving, then the share of such deceased nephew or niece shall go to such issue, share and share alike. In the event such deceased nephew or niece does not leave issue him or her surviving, then his or her share shall go to my said nephews and nieces as may be then living, share and share alike.
(c) The income payments provided for hereunder shall commence from the date of my death and shall be made monthly, or oftener, as my Trustee shall deem best, but shall only be made when and as such income after it shall have accrued shall be on hand for payment (except as hereinabove specifically otherwise provided), and not by way of anticipation, and no disposition, charge or incumbrance of such income or principal of the trust estate, or any part thereof, by any beneficiary, or distributee hereunder, by way of anticipation, shall be of any validity or legal effect, or be in any wise regarded by my Trustee, nor shall such income, or any part thereof, be in any wise liable to any claim of any creditor of any such beneficiary or distributee.
(d) * * * (Powers of trustee.)
Fourth: In the event that my husband shall predecease me, the trust hereinabove set forth shall be of no effect and, in that event, I direct that my executor hereinafter named distribute my estate in accordance with the provisions of clause (b) and (b)(1) of paragraph Third of this my Last Will and Testament.
Fifth: * * * (Appointment of executor.)
Except for the differences that may be noted in the following provisions, Bert's will was similar to decedent's will. It provided:
Second: I give and bequeath to my beloved wife, Wilhelmina L. Benjamin, all articles and effects of personal, domestic, or household use, or ornaments, including automobiles, of which I may die possessed.
Third: All the rest, residue, and remainder of my property, real, personal, or mixed, of whatsoever character and wherever situate, of which I may die seized or possessed, of which I may own or have any interest in at the time of my death, I give, devise, and bequeath to James G. Christie, of 606 South Michigan Avenue, Chicago, Illinois, as Trustee, to hold upon the following trusts, to-wit:
(a) To pay over to my wife during her lifetime the entire net income derived from my estate, and, in addition, such amount of the principal thereof, if any, as my said Trustee shall deem necessary for the good, sufficient, and complete support and comfort of my wife whould she find that the net income be not sufficient therefor.
(b) On the decease of my wife, to pay
(1) Ten per cent (10%) of the principal of my said estate, including any accruals of income not yet paid over, to the Alumni Association of the Iowa State College of Agriculture and Mechanical Arts, Ames, Iowa, to be used by such Association for any purpose or purposes as it may deem fit.
(2) Seven and one-half percent (7 1/2%) of the principal of my said estate, including any accruals of income not yet paid over, to each of my sisters, namely, Mrs. Mae Kilduff, of Newton, Iowa, Mrs. Anna Belle Hume, of Gulfport, Mississippi, Mrs. Leona Wormly, of Newton, Iowa, and Mrs. Elsie Kaufman, of Evanston, Illinois. If any of my said sisters should predecease me or should predecease my wife, then the share of such sisters shall go to such of her children as may be living at the time distribution of my said estate shall be made.
(3) All the rest, residue, and remainder of my said estate shall be made legacies, to such of the children of my said sisters as may be then living, share and share alike, and to the survivor and survivors of them.
(c) The income payments provided for hereunder shall commence from the date of my death and shall be made monthly, or oftener, as my Trustee shall deem best, but shall only be made when and as such income after it shall have accrued shall be on hand for payment (except as hereinabove specifically otherwise provided), and not by way of anticipation, and no disposition, charge or incumbrance of such income or principal of the trust estate, or any part thereof, by any beneficiary, or distributee hereunder, by way of anticipation shall be of any validity or legal effect, or be in any wise regarded by my Trustee, nor shall such income, or any part thereof, be in any wise liable to any claim of any creditor of any such beneficiary or distributee.
The codicils to both wills executed in November 1958 simply changed the trustees and executors named in the wills to make the First National Bank of Chicago trustee and executor under each will.
Decedent's husband did not renounce decedent's will but took under and pursuant to decedent's will.
Bert received the goods and chattels of the decedent, having an appraised value of $1,256, pursuant to article Second of the will, together with jointly owned Serie E savings bonds having a value at the date of decedent's death of $7,834.40, and in the administration of the estate there was set off by order of the Probate Court of Cook County, a $10,000 spouse's award, which was paid to Bert by the executor. All of the foregoing items totaled $19,090.40, and the total amount thereof has been determined by respondent to be allowable as a marital deduction under the provisions of section 2056, I.R.C. 1954.
There has been only one distribution of the principal from the trust established by decedent's will. This distribution, consisting of 2,000 shares of Maytag Co. common stock, was made by the First National Bank of Chicago, as executor of decedent's will, to itself as trustee under her will, and by the trustee to decedent's surviving spouse pursuant to a request and direction from him dated December 11, 1962. The stock was transferred from the First National Bank of Chicago, as executor of decedent's estate, to the First National Bank of Chicago, as truste...
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