Wells Fargo Bank & Union Trust Co. v. Commissioner

Petitioner, as executor of the estate of Ben F. Sternheim, deceased, seeks the re-determination of a deficiency in federal estate taxes held payable by the Tax Court.

Decedent created a revocable inter vivos trust, knows as the Ben F. Sternheim trust, of which Wells Fargo Bank was named trustee. The income from the trust property was to be paid to his sister, Blanche Sternheim, from the date of decedent’s death until the sister’s death at which time the corpus was to be distributed to certain charitable institutions. For the duration of the life estate the trustee was authorized to use the principal, up to ten per cent of its valu’e each year, in the event of sickness, accident, want, or other emergency to the life beneficiary.

When her brother died in 1940, Blanche Sternheim was receiving $7000 a year as life beneficiary of a trust which she herself had previously established and as to which Ben F. Sternheim was trustee. At the time of Ben F. Sternheim’s death (1940) Blanche Sternheim was sixty years old, in good health, and thrifty in habit; her living expenses amounted to $250 or $300 a month, and she saved to her own account about an equal sum each month.

After the death of…