Loeser v. Talbot

412 Mass. 361, 589 N.E.2d 301 (1992)

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Nature of the Case

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Facts

Decedent created a trust to benefit his wife and children. The trust provided that, should his wife survive him; the trust was to divide into three sub-trusts. One of these was a terminable interest trust in favor of his wife. Under the terms of this trust, decedent's wife was to receive the income during her life. The trustees had the discretion to pay some or all of the principal to her during her life as well. Decedent's wife was granted a special power of appointment with respect to the trust income, and a general power with respect to the principal. After decedent's death, the trustees (P) petitioned for reformation of the trust, with the consent of the beneficiaries (D). The trustees argued that the decedent had intended to give his wife a general power of appointment over the trust income, and a special power over the principal. P further noted that the reformation was necessary to qualify the trust for the Marital Deduction for purposes of Federal Estate Tax.