Wells Fargo Bank v. United States

This case involves estate tax deductibility of a charitable remainder pursuant to 26 U.S.C. § 2055 . The testatrix, Anita Wand, provided in her will for a life interest for her employee James Fuller, and a remainder for Occidental College. The trustee under the will, Wells Fargo, seeks a tax refund of approximately $1.4 million. The issues are whether Wand’s will was executed before 1979 despite a 1982 codicil, and whether Occidental College’s remainder was “presently ascertainable.” The district court determined that both conditions were met. We affirm.

I. Facts

The case comes up on stipulated facts and summary judgment. On April 5, 1971, Anita Wand executed a will creating a trust for two beneficiaries, her long time employee James Fuller, and Occidental College, an educational institution qualifying for tax treatment as a charity. Mr. Fuller was to receive $250.00 per month for life, use of Mrs. Wand’s house, *832 and medical expenses and payment from the Wand Estate of his personal income taxes.

Mrs. Wand executed codicils to her will in 1972, 1977, and 1982, each changing Mr. Fuller’s life interest. Mrs. Wand died September 4, 1985. Mr. Fuller, an 83 year old man with an…

dissenting:

I respectfully dissent.

We are faced with technical issues which require technical answers. The Tax Reform Act of 1969, Pub.L. No. 91-172, reprinted in 1969 U.S.C.C.A.N. 509, radically changed the rules and radically restricted charitable trust deductions. Ameliorative transition rules for instruments crafted under the old rules were adopted. But strict adherence to the exceptions contained in the transition rules is required.

To prevail in this case, Wells Fargo Bank (the taxpayer) must establish two things: (1) that the testatrix executed her will before January 1,1979; and (2) that the will met the requirements to qualify for a charitable deduction under pre-1969 tax law (the remainder had to be ascertainable at the time of death). Failing either of these two tests, the remainder interest was not “reformable” and would not qualify for a charitable deduction. The exercise is not simply post-death to make the remainder certain by amendment, reform, or disclaimer. The instrument must meet the threshold statutory criteria at the moment of death.

The majority’s argument that republication is not “execution” within the meaning of 26 U.S.C. § 2055 (e)(3)(C)(iv),…