National Bank of Commerce of San Antonio v. Scofield

169 F.2d 145, 37 A.F.T.R. (P-H) 146, 1948 U.S. App. LEXIS 3852

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 21, 1948
• Docket: 12228
• Status: Published

Opinions

WALLER, Circuit Judge.

The question here is whether or not the amount of the charitable trust was clearly shown to have been “presently ascertainable” at the time of the death of the settlor and, therefore, within the exception as to estate taxes that would otherwise have been payable. The trustee was in a position analogous to that of a remainderman who, after the expiration of a life estate, would take whatever the life tenant had not consumed. As sympathetic as we are with the generous impulses that prompted the testator in making a bequest to charity of that which remained after the death of his wife, we are, nevertheless, convinced that, at the time of the testator’s death, the ascertainment of the amount that would remain was largely a matter of conjecture. The trustees had the right to invade the corpus of the trust estate in order to carry out its duty liberally to provide for the support of the widow,¹ with no standard provided in the will by which such invasion, if any, could have been accurately calculated. In consequence of the inability to ascertain, at the time of testator’s death, the amount that would ultimately go to charity, no deduction under the statute and regulations for charitable bequests was allowable. “Rough guesses, approximations, or even the relatively accurate valuations on which the market place might be willing to act are not sufficient.” Merchants Nat. Bank v. Commissioner, 320 U.S. 256, 64 S.Ct. 108, 111, 88 L.Ed. 35.

The trustee was required to provide for the wife in “our home or a location of her choosing,” and was authorized to exercise “its sole discretion” in providing such home or location, as well as the “necessities and comforts in life” to which she was accustomed.

The uncontrolled discretion of a trustee — the vagaries and vicissitudes that attend an aged widow — are such indeterminate and variable factors that the ancient criterion of “judging the future by the past” should not be applied here as a formula for ascertaining, in praesenti, the amount that will remain when the discretion, the vagaries, and the vicissitudes have been resolved into tangibility by the widow’s death.

The issue is one of fact,² on which the lower Court found against the taxpayer on evidence that supports its finding.

The judgment is affirmed.

1 Tlie pertinent paragraph, of the will is as follows: “(d) My said trustee shall liberally provide for my beloved wife, Mary J. Higgins, maintaining her in our home or a location of her choosing, provided with the necessities and comforts in life to which she is accustomed; and my trustee may use such reasonable sums from the principal from time to time as it, in its sole discretion, may deem necessary for the carrying out of the provisions of this paragraph, so long as she may live.”

2 Because of the characteristic fullness and clearness with which the facts and issues in this case are stated in the dissenting opinion of Judge Hutcheson, the recital thereof, in this opinion, is eliminated.

2 Treasury Regulation 105, promulgated under the Internal Revenue Code, provides, in Sec. 81.44 Transfers For Public, Charitable, and Religious Uses:

“ * * * If a trust is created for both a charitable and a private purpose, deduction may be taken of the value of the beneficial interest in favor of the former only insofar as such interest is presently ascertainable, and hence severable from the interest in favor of the private use. * * *” and in Section 81.46, Conditional bequests : “ * * * If the legatee, devisee, donee, or trustee is empowered to divert the property or fund, in whole or in part, to a use or purpose which would have rendered it, to the extent that it is subject to such power, not deductible had it been directly so bequeathed, devised, or given by the decedent, deduction will be limited to that portion, if any, of the property or fund which is exempt from an exercise of such power”.