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In each of the years 2001 through 2004, the trust distributed 5
percent of the fair market value of the trust assets, valued as
of January 2 of each year, to the trust's beneficiaries.
An examination of the estate's return commenced sometime
before February 25, 2002, the date of a letter from respondent to
Mr. Carlile seeking additional information in connection with the
examination. A notice of deficiency was issued on September 18,
2003, in which respondent determined that the charitable
contribution deduction claimed by the estate for the remainder
interest should be disallowed because the trust did not satisfy
the requirements of section 2055.
During August 2002, certain of the interested parties made
various efforts to reform the trust. Mr. Carlile and the diocese
each prepared revised versions of the trust's governing
instrument, but neither version was ever executed by the trustee
or any of the beneficiaries. Mr. Carlile also prepared a draft
of a "Complaint for Restatement of Trust" for filing in State
court, which was circulated to the beneficiaries but never filed
with any court.
In August 2003, Mr. Carlile executed a document, also titled
"Third Restatement and Revision of Living Trust Instrument",
which by its terms revised the trust's governing instrument (2003
amendment). All of the beneficiaries of the trust, except Migle
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Last modified: May 25, 2011