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income and principal to the children and grandchildren of Mr.
Dietz for their "care, support and maintenance, hospital and
medical needs and education." Section 5.3 of the will stated the
following:
Any other provision hereof to the contrary
notwithstanding, my said wife shall have, so long as
she shall live, the absolute right to withdraw from the
principal of the trust, each calendar year, any amount,
in cash or in kind, not in excess of Five Thousand
Dollars ($5,000.00) or five percent (5%) of the then
value of the principal of the trust, whichever amount
is greater. Said right to withdraw such amount shall
be noncumulative, however, and if in any such year my
said wife shall fail to withdraw all of such amount she
shall not be entitled in any subsequent year to
withdraw such amount as she failed to withdraw in any
prior year. The sums, if any, actually withdrawn from
the trust by my said wife pursuant to this
authorization therefor shall be in addition to and not
in lieu of any discretionary payments to her by the
Trustee hereunder and need not be taken into account by
the Trustee in determining my wife's need for such
discretionary payments.
After the death of Mr. Dietz, the trust was established
pursuant to the provisions of his will. At no time prior to
decedent's death did she exercise her rights under section 5.3.
At decedent's death, the fair market value of the principal of
the trust was $1,349,170.02.
On April 14, 1993, the executor filed a Federal estate tax
return for decedent's estate. On March 16, 1995, respondent
issued a notice of deficiency to the estate, determining a
deficiency in estate tax of $24,634.19. Respondent increased the
gross estate by the amount of $67,458.50, which is equal to 5
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