estate which passed to other remaindermen, and to which the life tenant's power to consume was limited by the good faith standard and by the spendthrift provisions, did not qualify for the marital deduction. In other words the widow did not possess a 'general power of appointment' as to that one-half of the trust estate. (The other half went to her estate by the terms of the will).
A second case of the United States Court of Appeals for the Third Circuit which also applies the Pennsylvania law to a § 2056 situation is Hoffman v. McGinnes, 277 F.2d 598, (3rd Cir. 1960). Here again the Court considered the scope of the power to invade principal under a different set of testamentary directions. The Testator gave his wife 'the right to use and spend any or all of the principal of my said estate, if she so desires, and upon her request or requests made to (trustees) they shall pay to her from time to time any part of the principal of my estate she may desire and said trust shall cease as to that part of the principal so paid to her. * * *.'
The Court of Appeals (Kalodner, C.J.) said, 277 F.2d at p. 603:
'It would be difficult, if not impossible, to state any more explicitly an intent to confer 'an unrestricted power exercisable at any time during her life to use all or any part of' the principal of the decedent's trust estate.'
Judge Kalodner cites a number of Pennsylvania cases where the courts held the testator's intention to be that the beneficiary's demand was the sole requirement for invasion of principal.
In none of these cases is there any qualification, the beneficiary may use the proceeds for whatever purpose she sees fit, the trustee has no discretion but to pay over whatever is demanded.
The cases fall into the classification described in Scott on Trusts, § 128.3, 'Discretionary Trusts,' p. 67:
'In such a case the amount to which the life beneficiary is entitled depends wholly upon his own desires, and the trustee has no discretion to withhold.'
The court in Hoffman v. McGinnes, supra, held that this power satisfied the requirements for the marital deduction. It distinguished the case from Commissioner v. Ellis, supra, by stating:
'* * * Commissioner of Internal Revenue v. Ellis' Estate, supra, where it was held that a provision in the decedent's will authorizing the surviving wife's withdrawal from principal of such sums as she 'should require's did not vest in her a power of appointment, since under Pennsylvania law the surviving wife '* * * under the terms of the will did not possess an 'unlimited' power to invade the corpus or appoint the corpus to herself as unqualified owner', in view of the will's creation of 'remainder' (252 F.2d 113) interests.' 277 F.2d 598, at p. 600.
It may be of interest to note the hope of the Senate Finance Committee (supra) that:
'The most important consideration is to make the law simple and definite enough to be understood and applied by the average lawyer, and that the present bill will accomplish that purpose.'
Not only the average lawyer, but the writers in the field of estate planning and estate taxation have placed a uniform construction on § 2041.
We are, therefore, of the opinion that the decedent, Edna Buhl Putts, did not possess at the time of her death a general power of appointment over the assets in the trust estate established under the will of her husband, B. Swayne Putts, held by the trustee, Security-Peoples Trust Company. We do not find that she held any power exercisable in her favor, or in favor of her estate, her creditors, or the creditors of her estate. We find that title and possession of the trust assets was in the hands of an independent corporate trustee, which under the law of Pennsylvania was legally accountable for its administration, not only to the decedent, but to successive life income beneficiaries and remaindermen. We find that the Trustee alone was vested with the discretion to make invasion of principal, which discretion had to be exercised reasonably, and solely for the benefit of the named beneficiaries, and with regards to the needs and the other available assets of such beneficiary, and with regard to the protection of interests of other future beneficiaries and remaindermen. The decedent had no power to make an appointment, gift, transfer or testamentary disposition of any part of the trust assets to herself or her estate, and the assets were protected from the pledge, encumbrance, sale, anticipation, debts and liabilities of decedent by the testator's spendthrift provision.
An appropriate order will be entered.