*105 Decision will be entered for the respondent.
Petitioners' decedent devised his residuary estate in trust. His surviving spouse was entitled for life to all the income from the corpus of the trust with a general power in her to appoint two-thirds of the corpus by will. Held, no part of the transfer in trust qualifies for a marital deduction within
*1185 The respondent determined a deficiency in estate tax in the amount of $ 12,792.70. The issue is whether*106 a bequest in trust qualifies for the marital deduction within the provisions of
OPINION.
All of the facts are stipulated and are incorporated herein by reference. Petitioners' decedent died testate on October 26, 1949, and was survived by his wife. The pertinent portions of his will provided that his residuary estate was to go to his trustees in trust "to pay the net income thereof to my beloved wife, Esther, during the term of her natural life, in weekly installments."
The will also provided that if the net income of the trust estate did not amount to at least $ 100 per week, the trustees were authorized to pay to the wife out of the corpus so much as might be necessary to make the weekly payments to her at least $ 100. After 20 years, the minimum weekly payment to decedent's wife was to be increased to $ 200 per week.
The residuary clause of the will further provided as follows:
I direct my Trustees hereinafter named, upon the decease of my beloved wife, ESTHER, *107 to pay over and transfer the corpus of said trust fund, together with all accumulated income, as follows:
(A) Two-thirds (2/3) thereof as my beloved wife, ESTHER, may direct and appoint by her Last Will and Testament, and upon default of such direction and appointment, to her heirs at law and next of kin in accordance with the intestacy laws of the State of New York.
(B) One-third (1/3) thereof to my grand-nephews, ALLEN WEINRAUB, MELVIN WEINRAUB, HERBERT WEINRAUB and MARVIN BATON, in equal parts.
*1186 The provisions of
For the purpose of the tax the value of the net estate shall be determined * * * by deducting from the value of the gross estate --
* * * *
(e) Bequests, Etc., to Surviving Spouse. --
(1) Allowance of marital deductions. --
(A) In General. -- An amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate.
(B) Life Estate or Other Terminable Interest. -- Where, upon the lapse*108 of time, upon the occurrence of an event or contingency, or upon the failure of an event or contingency to occur, such interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed with respect to such interest --
(i) if an interest in such property passes or has passed * * * from the decedent to any person other than such surviving spouse (or the estate of such spouse); and
* * * *
(F) Trust with Power of Appointment in Surviving Spouse. -- In the case of an interest in property passing from the decedent in trust, if under the terms of the trust his surviving spouse is entitled for life to all the income from the corpus of the trust, * * * with power in the surviving spouse to appoint the entire corpus free of the trust * * *
(i) the interest so passing shall, for the purposes of subparagraph (A), be considered as passing to the surviving spouse, and
(ii) no part of the interest so passing shall, for the purposes of subparagraph (B) (i) be considered as passing to any person other than the surviving spouse. * * * [Emphasis supplied.]
Petitioners contend that, although decedent's will grants to his surviving spouse the power to appoint only*109 two-thirds of the corpus, the provisions of
In the alternative, petitioners urge that if the foregoing construction of the law is untenable, then decedent's will should be construed to create two separate trusts, held as a unit, and that the two-thirds of the corpus to which the power applies must be deemed a separate trust, complying in all respects with the provisions of the law relating to the marital deduction.
As to petitioners' first contention, it is our view that the plain language of the statute leaves no room for the construction urged. *1187 If Congress had intended the words "entire corpus" to mean "specific portion of corpus subject to the power," it would have been a simple matter to express the latter view in clear and unmistakable language (as *110 it has since done in the Internal Revenue Code of 1954, to which further reference will be made infra).
An examination of Senate Report No. 1013 (Part 2), 80th Cong., 2d Sess. (reported in
(4) The surviving spouse must have power to appoint the entire corpus free of trust, and such power must be exercisable in favor of such surviving spouse or in favor of her estate. A "power to appoint" the corpus includes any power which in substance and effect is such a power regardless of the nomenclature used in creating the power and local property law connotations. If the power is exercisable only at death, the trust is not disqualified merely because the surviving spouse also has the power*111 to invade only part of the corpus during her lifetime. It is also immaterial if, in addition to the power to appoint the entire corpus free of trust, the surviving spouse has a lesser power, such as to appoint any part of the corpus in trust for the benefit of others. However, the surviving spouse must have power to appoint the entire corpus to herself, or if she does not have such a power she must have power to appoint the entire corpus to her estate. If one such power is her only power, the requirement is met. She may also have any combination of additional powers. [Emphasis supplied.]
The pertinent regulation is more specific. Regulations 105, section 81.47a (c), sets forth five conditions which must be satisfied by the terms of a trust in order for a transfer in trust to qualify for a marital deduction within
If the surviving spouse is entitled to only a portion of the trust income, or has power to appoint only a portion of the corpus, the trust fails to satisfy conditions (1) and (3), respectively. However, such conditions may be satisfied by one or more of several separate trusts created by the decedent. An undivided interest in property may constitute the corpus of a trust, and the will or a single trust instrument may create more than one trust. [Emphasis supplied.]
In our opinion, the administrative construction included in the regulations is appropriate on the issue in question and we fail to find any basis for a different interpretation.
*1188 Petitioners urge that the House report on
We hold, on the basis of the foregoing discussion, that a power to appoint two-thirds of the corpus does not comply with the condition in
Petitioners' second contention is that, even if we should hold (as we have above) that the construction of the law urged by them is untenable, we should, nevertheless, determine that a marital deduction is allowable on the basis of a construction of decedent's will to the effect that two separate trusts rather than one were created, each consisting of an undivided interest in the same property, with the power in the surviving spouse applicable to the separate trust consisting*114 of two-thirds of the corpus.
The desire to effectuate an equitable result is appealing, but we have no more authority to amend decedent's will than we have to amend the applicable statute.
Whether an instrument creates one or more trusts depends upon the intention of the grantor or creator as disclosed by the provisions of the instrument.
We hold, therefore, *115 that no part of the property left in trust qualifies for the marital deduction.
Decision will be entered for the respondent.