A. Frederic Leopold and Walter A. Keane, as Executors of the Estate of Hans G. M. De Schulthess, Deceased v. United States

The district court awarded the executors of the estate of Hans G. M. de Schulthess a refund of federal estate taxes, and the government appeals.

The government asserts: (1) that the entire value of the corpus and the undistributed accumulated income of two identical inter vivos trusts created by the decedent for the benefit of two of his daughters is includible in his gross estate; and (2) that a payment made by the executors to the guardian of a third daughter was a nondeductible testamentary gift and ’ not a deductible claim against the estate.

The decedent died in an automobile accident in 1962 at the age of 44. He was not married at the time of his death. Two former wives, Amelie de Schulthess and Constance Trevor de Schulthess, and three daughters, Catherine, Celeste and" Beatrice Tina survived. Catherine and Celeste were the children of his first wife, Amelie, and Beatrice Tina was the child of his second wife, Constance. All three daughters were minors at the time of his death.

I. Trusts for the Benefit of Catherine and Celeste

The first issue is the includibility in-the decedent’s gross estate of the entire corpus and accumulated income of two inter vivos…