403, Section 11, 20 P.S. § 223, as an exercise of the power of appointment conferred on decedent by the donor.
Under Pennsylvania law, a general devise or bequest constitutes an execution of a general power of appointment, unless a contrary intention is made manifest in the will. Sec. 223, Title 20, Purdon's Pa. Statutes; In re Huddy's Estate, 236 Pa. 276, 84 A. 909; In re Wilbur's Estate, 334 Pa. 45, 53, 5 A.2d 325; Provident Trust Co. of Philadelphia v. Scott, 335 Pa. 231, 6 A.2d 814.
The action of John Barvlay, Jr., in electing to take under the will of Emma W. Coulter and not under decedent's will does not affect the legal status created by the Pennsylvania Act of Assembly and the will of decedent.
The Coulter trust property is includable under section 302(a) which reads: 'To the extent of the interest therein of the decedent at the time of his death; * * * .' A life tenant having a general power of appointment has an estate equivalent to a fee. In re Price's Estate, 21 Pa. D. & C. 542; In re DeVictor's Estate, 39 Pa.D. & C. 551; cf. In re Perkins' Trust Estate, 314 Pa. 49, 170 A. 255. In re Wilbur's Estate, 334 Pa. 45, 53, 5 A.2d 325; Lyon v. Alexander, 304 Pa. 288, 292, 156 A. 84, 76 A.L.R. 1427; See also Curry v. McCanless, 307 U.S. 357, 371, 59 S. Ct. 900, 83 L. Ed. 1339, 123 A.L.R. 162.
Plaintiff contends that the interest of decedent in the trust fund contingent and is not includable in the gross estate under Section 302(a). The Pennsylvania cases cited by him involve an actual condition which had to be fulfilled. In this case the right was given without a condition. See Helvering v. Hallock, 309 U.S. 106, 60 S. Ct. 444, 84 L. Ed. 604, 125 A.L.R. 1368. This contention is not sustained.
Defendant contends that the Coulter Trust property is includable in the decedent's tax estate under section 302(a) on the ground that decedent had a life estate and remainder in the trust fund, which constitutes a fee interest, and also by reason that the decedent blended the trust fund with her own estate. I do not pass upon this contention for the reason that I am of the opinion that the Coulter trust property is includable as part of the decedent's taxable estate under section 302(a) and (f) for the reasons already given.
Let an order for judgment be prepared and submitted in accordance with the Findings of Fact, Conclusions of Law and this Opinion.
Findings of Fact
1. The Court finds the facts as set forth in the stipulation of the parties, filed September 17, 1947, which, by reference, is made a part hereof.
2. The will of Emma W. Coulter contains, inter alia, the following:
'All net income from the property thus held in trust under the provisions of this Article, including the net income from said trust fund, after paying from said income all taxes, charges and operating expenses of every sort, shall be distributed by said trustees, not less frequently than annually, during the existence of said trust, among my children, Richard Coulter, Rebecca Coulter Barclay, Henry W. Coulter, William A. Coulter and Margaret Coulter, in equal shares, provided that, if any of my said children shall then be deceased, the share of the income which such deceased child would have received shall be disposed of in such manner as he or she may have, by his or her last will, appointed, and, in default of such appointment, such share of income shall go to such person or persons, as, by the laws of the State of Pennsylvania, would have been entitled to the same if such deceased child at the time of each payment of income had been legally seized and possessed of said income in his or her own right and had died intestate.
'The said trust shall immediately terminate upon the death of the last survivor of said trustees and, in any event, shall terminate at the expiration of twenty-one (21) years after the date of my death.
'The said trustees are hereby empowered, in their sole discretion, to terminate the said trust at any time prior to the expiration of said period of twenty-one (21) years after my death if they shall deem proper.
'Upon the termination of said trust, the property, real and personal, then held in trust by the trustees under this Article of this codicil shall go, absolutely, in fee simple and free from all trusts, to my said children, Richard Coulter, Rebecca Coulter Barclay, Henry W. Coulter, William A. Coulter and Margaret Coulter, in equal shares, provided that, if any of my said children shall then be deceased, the share of such deceased child shall be disposed of in such manner as he or she may have by his or her last will appointed, and, in default of such appointment, such share shall go to such person or persons as, by the laws of the State of Pennsylvania, would have been entitled to the same if such deceased child at the time of his or her death had been legally seized and possessed of said share in his or her own right and had died intestate.'
3. Plaintiff concedes that the residuary clause in decedent's will which reads: 'All the rest, residue and remainder of my estate I will devise and bequeath to my son John Barclay' operated, by reason of the provisions of the Pennsylvania Wills Act of 1917, Act of June 7, 1917, P.L. 403, Section 11, 20 P.S. § 223, as an exercise of the power of appointment conferred on decedent by the donor.
4. In addition to the fee and expenses allowed by the Commissioner the plaintiff has agreed to pay to said attorneys for their services in connection with said refund claim and this proceeding the sum of $ 4,500 and to reimburse said attorneys for expenses incurred by them, which expenses at the time of trial amounted to $ 83.29, of which $ 70.29 had actually been paid by plaintiff to said attorneys prior to the time of trial.
5. In connection with this proceeding plaintiff incurred expenses for certified copies of records of the Register of Wills for Westmoreland County, Pennsylvania, in the amount of $ 29.50, which certified copies were introduced in evidence as exhibits at the trial.
Conclusions of Law
1. In computation of decedent's estate tax liability plaintiff was entitled to deduct attorney's fees in the amount of $ 4,500 and expenses paid or agreed to be paid by plaintiff in connection with the claim for refund here involved and the conduct of this proceeding in the amount of $ 112.79.
2. The monies collected by the Collector of Internal Revenue from plaintiff constituting estate tax on decedent's estate without full allowance of deductions for said attorney's fee and expenses and interest thereon were illegally collected and plaintiff is entitled to a refund of such over-payment together with interest thereon as provided by law.
3. The one-fifth interest in the residuary estate of Emma W. Coulter, over which decedent had a power of appointment is includable in decedent's taxable estate under section 302(a) and section 302(f) of the Revenue Act of 1926, as amended, 26 U.S.C.A.Int.Rev.Acts, page 227 et seq.
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