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ALLEN v. UNITED STATES

May 21, 1965

Elizabeth Joan ALLEN and Alice Edna Stuhmer, individually and as Executrices of the Estate of Chester A. Allen, deceased, Plaintiffs,
v.
UNITED STATES of America, Defendant



The opinion of the court was delivered by: ZAVATT

Plaintiffs have instituted this action against the United States seeking a refund of estate taxes in the amount of $ 18,271.33. In essence they claim that the interest passing under the last will and testament of Chester A. Allen, to his widow, Kathleen M. Allen, qualifies for the marital deduction provided for in 26 U.S.C. § 2056, the pertinent provisions of which provide:

' § 2056. Bequests, etc., to surviving spouse

 '(a) Allowance of marital deduction. -- For purposes of the tax imposed by section 2001, the value of the taxable estate shall, except as limited by subsections (b), (c), and (d), be determined by deducting from the value of the gross estate 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 in included in determining the value of the gross estate.

 'b) Limitation in the case of life estate or other terminable interest. --

 '(1) General rule. -- Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest --

 '(A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money's worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and

 '(B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;'

 The action is now before this court on cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. There are no disputed questions of fact. The dispositive question presented by the pleadings is whether the interest passing to Mrs. Allen was a qualifying interest under 2056 or whether it was, as the District Director has concluded, a nonqualifying, terminable interest. For the reasons hereinafter stated, it is the finding of this court that the interest was a nonqualifying, terminable interest; that the marital deduction was properly disallowed; that summary judgment must be entered for the defendant.

 The last will and testament of Chester A. Allen executed on September 3, 1953, evidences a very clear testamentary intent. The preamble thereto provides:

 'I have the problem of taking care of my daughter Alice Edna Stuhmer, a daughter by my first marriage, in order to fit in with the rights and privileges of my wife and within the arrangements of the law. In an effort to treat all of my children in exactly the same manner, I have arranged this Will in alternate parts. PART I will be effective provided my wife, Kathleen M. Allen, will make the agreement therein provided in form satisfactory to the Surrogate under whose jurisdiction this Will will be probated. PART II will be effective only in the event that my wife, Kathleen M. Allen, chooses not to make the agreement which I suggest and request, or is unable to do so.'

 The SECOND clause of PART I provides:

 'SECOND: Provided my wife, Kathleen M. Allen, will sign and execute an agreement suitable to the Surrogate under whose jurisdiction this Will will be probated, and file it in the Surrogate's Court, or any such other place as the Surrogate may direct, under which agreement she is to contract to make a Will and leave her estate, which is to include the assets of her own estate, almost all of which have been gathered together from my earnings as we lived and shared together, and from our home which I purchased and placed in our two names as tenants by the entirety, as well as the estate which she will inherit by this PART I of my Will, in the following manner:

 A: Payment of her just and normal debts and expenses.

 B: Legacy or legacies not to exceed Five Thousand Dollars ($ 5,000.) in such manner as she may choose. If my daughter Elizabeth Joan Allen is unmarried at the time of my wife's death, I suggest but do not require that most, if ...


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