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annually to me or for my benefit. The Trustee shall
also pay to me or apply for my benefit so much of the
principal of the trust property as she may determine in
her sole discretion to be necessary or desirable for my
health, welfare, maintenance and support. In so doing,
she should be guided by the fact that I have no spouse
or other comparably significant object of my affection,
and will leave no descendants or collateral descendants
for whom the principal should be preserved, if
possible.
The trust also contained a spendthrift provision as its “SEVENTH”
term and condition. At petitioner’s death, the trustee was
directed to distribute remaining principal and undistributed
income to a friend of petitioner’s, if then living, or to the
friend’s descendants.
On the same October 26, 1999, date, petitioner executed a
quitclaim deed transferring to the trust for nominal
consideration a single-family residence located on Cape Cod,
Massachusetts. Petitioner had inherited the home from her
parents on July 28, 1986. At the time petitioner transferred the
property, the residence did not enjoy clear marketable title on
account of an outstanding 25-percent interest that had never been
obtained by the family members who were her predecessors in
title. After transfer of the property, petitioner owned no other
significant assets. The home generated rental income of
approximately $600 per month, which petitioner admittedly failed
to report on her 1995 through 1999 returns.
In December of 1999, the trust entered into an agreement to
sell the residence. Petitioner’s lawyer had been able to
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Last modified: May 25, 2011