Old Colony Trust Co. v. United States

423 F.2d 601 (1970)

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Nature of the Case

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Facts

The income of the trust at issue was payable to the settlor's son: eighty percent of the income was to be paid to the son, and the rest was to be added to the principal. The trust instrument gave the trustees absolute discretion to increase the percentage of income payable to the son in case of illness or changed circumstances, or to decrease the payments if they deemed it to be in the son's best interest. The trust instrument also gave the trustees broad management powers and investment authority. During his life, the settlor was also a trustee of the trust. Upon the settlor's death, a tax was assessed against his estate for the principal which settlor has contributed to the trust. The executor of the estate (P) paid the tax and sued to recover the amount paid.