Rev. Rul. 54-285

Advice is requested whether the value of the remainder interest in a trust created by the decedent which passes to charity at the death of the decedent's wife, constitutes a deduction from the decedent's gross estate under section 812(d) of the Internal Revenue Code where the trust agreement provides that the trustee is authorized and empowered to pay from the principal of the trust estate to or for the benefit of the settlor's wife, if she should survive him, such amounts, if any, as the trustee in its sole discretion may from time to time deem necessary for her comfort, support, hospital or medical expenses.

At the date of decedent's death his widow, age 79, had substantial means and an independent income which was more than adequate to take care of her moderate needs.

The question involved is whether the present value of the remainder which charity will receive is ascertainable with sufficient accuracy to permit the deduction under section 812(d) of the Code and section 81.44 of Regulations 105.

Where the power of invasion is limited by such words as `comfort and support' with no express standard or limitation in the will or instrument, such words should be interpreted as meaning the comfort and support according to the standard of living enjoyed by the beneficiary prior to the decedent's death, if such interpretation is consistent with applicable local law, and other terminology in the will or instrument does not require some different interpretation. (The inclusion of the words `hospital or medical expenses' does not enlarge the power of invasion as hospital and medical care are included within the broad meaning of comfort and support.) If it is considered that a standard is fixed by the will or instrument, there remains for determination the probability of invasion of corpus for the stated purposes. If there is very little or no probability of invasion, the deduction should be allowed. If the facts indicate the probability of invasion to a limited extent which is calculable in accordance with an ascertainable standard, the deduction should be denied only to such extent.

The trust instrument in the instant case impliedly fixes a definite standard, as the trustee is not authorized to use principal except for the proper comfort and support of the widow. As of the date of decedent's death the likelihood of any invasion of the principal for the proper comfort and support of the widow was so remote as to be negligible.

In view of the foregoing it is held that a charitable deduction under section 812(d) of the Internal Revenue Code may be allowed on account of bequests or gifts of remainder interests to charity in cases where the will or instrument authorizes invasion of corpus for the comfortable maintenance and support of life beneficiaries if (1) there is an ascertainable standard covering comfort and support which may be either express or implied, and (2) the probability of invasion is remote or the extent of the invasion is calculable in accordance with some ascertainable standard.