originated in antiquity. Hele v. Bond was decided in England in 1717, more than 50 years before our Revolution. Conditions existing with respect to the ownership of property have changed in many respects since that time, as much, in fact, as have means of transportation and communication. It can serve no good purpose today to perpetuate archaic rules of law, slavishly, in situations not contemplated when the rules were formulated.'
Justice Qua of the Supreme Judicial Court of Massachusetts in State Street Trust Co. v. Crocker et al., 306 Mass. 257, 28 N.E.2d 5, 128 A.L.R. 1166 (1940), in referring to Hele, said:
'It may be doubted today whether the doctrine of that case as applied within the framework of a modern trust is not more likely to prove a pitfall than a convenience. But if it is the law, it plainly defeats the intention of the settlor or testator and is therefore so far opposed to the present trend that it ought not to be extended by analogy or otherwise to new situations not within its established scope.'
I conclude that the settlor's single amendment in the instant case did not terminate settlor's interest in the trust within the meaning of Section 811(d) of the Internal Revenue Code of 1939.
AS TO ITEM NO. 3
May coexecutors of an estate automatically deduct expenses of the sale of the testator's realty from the gross estate without a showing that the sale was reasonable and necessary to the proper administration of the estate?
Paragraph XIII of the last Will and Testament of Gertrude McCormick, Deceased, provided as follows:
'For the purpose of administering my said estate and executing the above trusts, I hereby authorize and empower my Executors hereinafter named, in their discretion, to sell any and all real estate and personal property which I may own at the time of my death, either at public or private sale, and to make, execute, acknowledge and deliver good and sufficient deeds or assurances of title therefor; free of all trust and limitations and without liability on the purchaser to see to the application of the purchase price. I hereby further authorize and empower my said Executors hereinafter named, in their discretion, to borrow money from such persons as they may desire including the power to borrow from themselves as individuals or as a fiduciary under any other trust agreement, to execute and renew promissory notes, and to pledge the assets of my estate as security therefor.'
There can be no question but that the sales of the nine parcels of real estate on or about October 28, 1953 were made by decedent's Executors pursuant to the power and authority conferred upon them by the will of the said Testator.
Certainly an Executor's first concern should be a prompt and orderly liquidation of the estate in compliance with the terms of the will. This estate consisted of real property and personal property. Certain trusts were created and a complete distribution made of the estate. To say that a sale under such circumstances is not necessary but rather only for the benefit of the distributees is picayunish and does not make sense.
Section 812(b) and (2) of the Internal Revenue Code of 1939 provides in part as follows:
'For the purpose of the tax the value of the net estate shall be determined, * * * by deducting from the value of the gross estate --
'(b) Expenses, losses, indebtedness, and taxes. -- Such amounts --
'(2) for administration expenses, 'as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, * * *.'
Section 81.32 of Treasury Regulations 105 (1939 Code); Appendix, infra, states:
'The amounts deductible from the gross estate as 'administration expenses' are such expenses as are actually and necessarily incurred in the administration of the estate, * * *.'
In Shaffer Estate, 360 Pa. 390, 61 A.2d 872 (1948), the Court held that commissions claimed by executors in connection with the sale of real estate under a power of sale were proper administration expenses. It would certainly seem that expenses to survey lands of a decedent incidental to the sale thereof and the necessary State and Federal transfer documentary stamps affixed to the deeds of conveyance should be equally necessary expenses to be incurred in the settlement of an estate.
Shaffer Estate, supra, further held, inter alia: 'Other and more recent decisions confirm the correct rule to be that, even though a will does not effect an equitable conversion, a discretionary power of sale thereunder is sufficient to authorize the executor to convey the decedent's real estate: * * * there is a conclusive presumption that a general power of sale is for the payment of debts: * * *.'
In Bartlett's Estate (Brown v. Smith), D.C.E.D.Pa., 153 F.Supp. 674, 678 (1957), the Court said:
'In Pennsylvania there is a conclusive presumption that a general power of sale in a will is for the payment of decedent's debts. From the exercise of such a power of sale arises the inference that the sale was for the purpose presumed by law. In re Shaffer's Estate, 1948, 360 Pa. 390, 61 A.2d 872. No evidence was here offered to overcome the inference. The expenses disallowed are such administration expenses as are allowed by the Commonwealth of Pennsylvania. The unchallenged inference is that the expenses are, as well, expenses of sales necessary to pay decedent's debts. Similar expenses were held to be deductible in Martha A. Allison Estate, 1946, 5 T.C.M. 992 and Estate of Louis Sternberger, 1952, 18 T.C. 836. The Commissioner erred in disallowing the deduction for these expenses. * * *'
The Commissioner erred in disallowing the deduction for these expenses.
Let Order be submitted.