258 F. Supp. 626 (1966) | Cited 0 times | D. Maine | July 25, 1966

Opinion and Order of the Court

GIGNOUX, District Judge:

Plaintiff is the surviving executor and trustee of the estate of Frank B. Emery. It brought this action for refund of $6,157.86 federal income taxes, and assessed interest in the amount of $929.84, paid under protest for the fiscal years ended March 31, 1961, 1962 and 1963. 1" The question presented is whether plaintiff is entitled to charitable deductions for undistributed capital gains in the years involved as income permanently set aside for charitable purposes within the meaning of Section 642(c) of the Internal Revenue Code of 1954, 26 U.S.C. § 642(c). 2"

Frank B. Emery died testate on May 3, 1959. After making certain specific bequests and creating a marital trust of one-half of his adjusted gross estate, the decedent, in Clause Fourth of his will, left the residue of his estate in trust, to pay the net income to his wife, Catherine F. Emery, for life. 3" Clause Fourth of the will further provided that, upon Mrs. Emery's death, the trustees were

" . . . to make the following payments from the income (of the trust):

"A. To my nephew, Clarence L. Emery, the sum of Two Hundred Dollars ($200) monthly so long as he may live, and after his death, One Hundred Dollars ($100) monthly to his wife, Helen Williamson Emery, for her life, or until her remarriage, and the sum of Fifty Dollars ($50) monthly to his daughter, Ruth Evvie Emery, for her life, and the sum of Fifty Dollars ($50) monthly to his daughter, Eleanor Jean Emery, for her life. On the death of their mother, she having survived their father, or on his death, if their mother does not survive him, said monthly payments to my said two grandnieces shall be increased to One Hundred Dollars ($100) each, and I further authorize my Trustees to pay such increased payments during the lifetime of their mother, if necessary, in the sole discretion of my Trustees, to provide for their comfortable support and maintenance, including extraordinary bills for medical or hospital care and nursing.

"B. Since unexpected misfortune cannot be foreseen, to my aunt, Susan Emery Rodick, of Portland, Maine, and to my cousins, Ralph W. Emery, of Newton, Massachusetts, Philip Benjamin of Philadelphia, Pennsylvania, and Sumner S. Clark, of Cape Elizabeth, Maine, the sum of One Hundred Dollars ($100) each, monthly, if and so long as my Trustees in their sole discretion, deem such payments necessary for the comfortable support and maintenance of any or all of them.

"C. To my wife's brother, Clarence Fitzpatrick, of Munfordville, Kentucky, the sum of Fifty Dollars ($50) monthly so long as he may live.

"D. To my wife's niece, Aline Brent Warren, of Louisville, Kentucky, the sum of Fifty Dollars ($50) monthly so long as she may live.

"E. To my wife's niece, Laura Wilkins Schonemann, of Louisville, Kentucky, the sum of One Hundred Dollars ($100) monthly so long as she may live.

"F. In the event that my Trustees find that the monthly payments of income provided for in this paragraph FOURTH of this Will would exceed the income of said trust available for distribution, the payments to each beneficiary shall be reduced proportionately, but such reduction may be made up later if excess income becomes available. I authorize my Trustees, however, subject to the approval of the Probate Court, to increase or decrease the payments provided for in this paragraph FOURTH in case there should be available unused income or an increase in cost of living or if the needs of the beneficiaries for comfortable support should change.

"G. In case the bequest to my household employees in paragraph SECOND A of this Will is ineffective because of the survival of my wife, then, on my wife's death, to each of the household employees in our service or in my wife's service at the time of her death, a bequest on the same basis as contained in said paragraph SECOND A of this Will. 4"

"H. All the residue and remainder of the net income of said trust to use for charitable objects and purposes as my Trustee may in its sole discretion from time to time deem desirable to carry out the purposes of this Will. I particularly suggest to my Trustee my interest in such charitable purposes as giving aid by means of loans to worthy and needy young people to help them to obtain an education to fit them for their life's work, such as medical, Divinity, engineering, and other professional education (not, however, limiting my trustee by this enumeration) and to make a start in business or professional life; also my interest in charitable organizations for the relief or care of needy children or the aid of handicapped needy persons trying but unable to help themselves, or the relief or care of other needy persons, but preferably those not largely cared for by governmental pension or aid or organized charitable aid. In giving aid to Christian charitable organizations, objects or purposes, it is my wish that preference be given to Protestant Christian organizations, objects and purposes, and to those organizations without substantially sustaining memberships. It is further my wish that preference be given, whenever possible, to the aid of needy or distressed and worthy relatives of myself or my wife. In case the net income available for the purposes of this paragraph shall at any time appear to my Trustee inadequate to accomplish the desired charitable purpose, my Trustee may at its option accumulate income for such period as it deems desirable. If the principal of my trust estate should, at my death or before or at the death of the last beneficiary of paragraphs A to E, inclusive, be so reduced as to make the accomplishment of the purposes of my trust impossible, my Trustee may petition the proper Court for a termination of the trust, and in case of such termination my residuary estate shall be distributed one-half to said Clarence L. Emery, or his heirs, and the remaining one-half to said Aline Brent Warren, Clarence Fitzpatrick and Laura W. Schonemann, or if one or two of these three are deceased, his or her share to the survivors, equally, and if all of said last named three are deceased, their shares shall go to the Salvation Army."

Mr. Emery was survived by his wife, Catherine F. Emery, who died on September 2, 1962. He and Mrs. Emery had no children or other dependents. At the time of Mr. Emery's death, Mrs. Emery was 59 years of age, with a life expectancy of 22.4 years, and the ages of the other named beneficiaries with possible life interests in the residuary trust created by Clause Fourth of Mr. Emery's will were as follows: Name Age Clarence L. Emery DeceasedHelen W. Emery 59Ruth E. Emery 40Eleanor J. Emery 38Susan E. Rodick DeceasedRalph W. Emery 77Philip Benjamin 58Sumner S. Clark 42Clarence Fitzpatrick 65Aline B. Warren 56Laura W. Schonemann 51

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