Estate of Ford v. Commissioner

Scott, J.,

dissenting: I respectfully dissent from the majority view that the decedent did not retain within the meaning of section 2036(a), I.R.C. 1954, the right to designate the persons “who shall possess or enjoy the property” which he transferred to the trust for his grandson, Edward Ford Donaldson. Because of the provision of the trust instrument that the corpus be distributed to Edward when he became 25 years of age, it was unlikely at the time of the creation of the trust and at the time of decedent’s death that any person other than Edward would ever benefit from the trust. This fact does not, however, as a matter of law distinguish this case from Merchants Bank v. Commissioner, 320 U.S. 256 (1943), which involved a trust for a life beneficiary with the remainder to go to a charity, and the majority opinion correctly does not attempt to distinguish the case on such a basis. The distinction made by the majority between the instance case and Merchants Bank v. Commissioner, sufra, is that in the instant case the word “need” is a limitation on the word “happiness.” In my view this distinction is not valid. I would hold a right of invasion for the beneficiary’s “need of funds * * * for his * * * happiness” is indistinguishable from a right of invasion for the “happiness” of the income beneficiary.

Rattm, /., agrees with this dissent.