1973 U.S. Tax Ct. LEXIS 137">*137
60 T.C. 120">*120 OPINION
The Commissioner determined a deficiency of $ 18,307.92 in the estate tax of the Estate of Joseph F. Abely. The only issue is whether a widow's allowance of $ 50,000 under Massachusetts law is a "terminable interest" within the meaning of
Joseph F. Abely (decedent) died testate on March 29, 1969, a citizen of the United States and a resident of Massachusetts. His survivors included his widow, Nora Abely, and1973 U.S. Tax Ct. LEXIS 137">*139 three sons. On March 11, 1970, one of the sons, William F. Abely, as coexecutor, filed the estate tax return in question. At the time the petition herein was filed William F. Abely's principal office was in Quincy, Mass.
In his will the decedent made specific bequests amounting to $ 54,000, consisting of bequests of $ 10,000 each to his wife and three sons, and $ 2,000 each to his grandchildren living at the time of his death, of which there were seven. The will further directed that the residue of his estate be placed in a testamentary trust, with his wife and three sons as trustees. Nora Abely was the income beneficiary of this trust, and she was given the right to withdraw any part of the corpus of the trust at the discretion of a majority of the trustees. Upon her death the trust was to terminate, and the remaining principal of the trust, along with any remaining undistributed income, was to be equally divided among decedent's three sons.
60 T.C. 120">*121 The estate tax return reported a total gross estate in the amount of $ 365,113.83, consisting of the following items:
Stocks and bonds | $ 266,622.00 |
Insurance | 61,346.77 |
Jointly owned property | 37,145.06 |
365,113.83 |
1973 U.S. Tax Ct. LEXIS 137">*140 The return claimed deductions in the aggregate amount of $ 192,585.14, which included a $ 172,528.68 marital deduction, which in turn was based upon an unexplained figure of $ 311,057.37 identified as "Bequests, etc., to surviving spouse." The residuary estate, based upon the data reported in the return, was $ 192,565.54, computed as follows:
Gross estate | $ 365,113.83 | |
Less: | ||
Specific bequests | $ 54,000.00 | |
Insurance | 61,346.77 | |
Jointly owned property | 37,145.06 | |
Funeral and administrative expenses | 17,911.02 | |
Debts of decedent | 2,145.44 | |
172,548.29 | ||
192,565.54 |
On October 15, 1970, over 11/2 years after the death of Joseph F. Abely, Nora Abely petitioned the Probate Court of Norfolk County, Mass., for a widow's allowance for "necessaries for herself." On February 25, 1971, the court granted her petition and awarded her a widow's allowance of $ 50,000. The parties have stipulated that "The widow's allowance of $ 50,000 was included in the marital deduction claimed on the estate tax return."
In his deficiency notice, the Commissioner disallowed $ 64,036.85 of the marital deduction of $ 172,528.66 claimed by the estate. This amount was disallowed "because1973 U.S. Tax Ct. LEXIS 137">*141 the interest of the surviving spouse in property passing from the decedent did not exceed $ 108,491.83 as follows:
Transfer of jointly-owned property | $ 37,145.06 |
Insurance proceeds on life of decedent | 61,346.77 |
Specific bequest (Article 6 of Will) | 10,000.00 |
$ 108,491.83" |
Accordingly, the Commissioner allowed a marital deduction of only $ 108,491.83. He did not allow a marital deduction in any amount for the value of Mrs. Abely's interest in the testamentary trust, or for the $ 50,000 widow's allowance which she was granted. The Commissioner also increased the gross estate by $ 1,500, including therein the fair market value of the household furnishings of the decedent.
60 T.C. 120">*122 The only issue to be decided is whether the widow's allowance of $ 50,000 qualifies for the marital deduction under
1973 U.S. Tax Ct. LEXIS 137">*142
The issue as to the point of time from which to determine whether a widow's allowance is a "terminable interest" within the meaning of
The Massachusetts "widow's allowance" is provided for in
1973 U.S. Tax Ct. LEXIS 137">*146 Petitioner relies upon
Finally, petitioner has argued that a distinction should be drawn1973 U.S. Tax Ct. LEXIS 137">*148 between a lump-sum allowance, as in the instant case, and an allowance for a monthly amount, claiming that this distinction was recognized 60 T.C. 120">*125 by the Supreme Court in
Accordingly, in order to give effect to possible additional deductions for attorney's fees,
1.
(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 is 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; and no deduction shall be allowed with respect to such interest (even if such deduction is not disallowed under subparagraphs (A) and (B)) -- (C) if such interest is to be acquired for the surviving spouse; pursuant to directions of the decedent, by his executor or by the trustee of a trust. * * * * (3) Interest of spouse conditional on survival for limited period. -- For purposes of this subsection, an interest passing to the surviving spouse shall not be considered as an interest which will terminate or fail on the death of such spouse if -- (A) such death will cause a termination or failure of such interest only if it occurs within a period not exceeding 6 months after the decedent's death, or only if it occurs as a result of a common disaster resulting in the death of the decedent and the surviving spouse, or only if it occurs in the case of either such event * * *↩
2.
Such parts of the personal property of a deceased person as the probate court, having regard to all the circumstances of the case, may allow as necessaries to his widow for herself and for his family under her care, or if there is no widow or if the deceased was a woman, to the minor children of the deceased, not exceeding one hundred dollars to any child, and also such provisions and other articles as are necessary for the reasonable sustenance of his family, if the deceased was a man, or of her minor children, if the deceased was a woman, and the use of the house of the deceased and of the furniture therein for six months next succeeding his or her death, shall not be taken as assets for the payment of debts, legacies or charges of administration. After exhausting the personal property, real property may be sold or mortgaged to provide the amount of allowance decreed, in the same manner as it is sold or mortgaged for the payment of debts, if a decree authorizing such sale or mortgage is made, upon the petition of any party in interest, within one year after the approval of the bond of the executor or administrator.↩
3. Similarly,