Pond v. Pond

Facts

Pond created a revocable trust naming himself and his wife as trustees. During the settlor’s lifetime, all of the annual income and such principal as the trustees deemed necessary were to be paid to the settlor and his wife. If one of the children predeceased the parents, the trust provided that the deceased child’s share shall pass “equally and in equal shares to his/her issue by right of representation,” when the issue reach the age of thirty. The couple transferred all of their assets except their marital home into the trust. In his will, the settlor bequeathed all of his tangible personal property to his wife and the residue of hi estate, both real and personal, to the trust. The tax clause in the will authorized his wife, as executrix, “in her sole, exclusive and unrestricted discretion, to determine whether to elect under Section 2056(b) (7) of the Internal Revenue Code of 1954 to qualify all or a specific portion of the Sidney M. Pond Revocable Trust dated January 17, 1991 for the federal estate marital deduction and any marital deduction available under the law of the state in which I am domiciled at the time of my death.” The trust made no provision for the wife in the event of the settlor’s death. To qualify under Section 2056, the trust must provide the surviving spouse with a qualifying income interest for life. The settlor’s estate would have had to pay $70,000 in otherwise avoidable taxes without the deduction. The plaintiff requested that the court reform trust to give effect to the settlor’s intent to provide for her in the event of her death and to have the estate qualify under the martial deduction for federal estate tax purposes.