## Facts

- David N. Marine executed a 1981 will leaving the residuary estate equally to Princeton University and Johns Hopkins University, both qualified charities.
- In 1982, Marine executed a codicil authorizing his personal representatives, in their “sole and absolute discretion,” to “compensate persons who have contributed to [his] well-being” or were “helpful” during his lifetime.
- The codicil permitted distributions of tangible personal property, securities, or cash, as the personal representatives deemed “a fair bequest for services rendered.”
- The codicil capped each such bequest at 1% of the gross probate estate but set no limit on the number of recipients and imposed no aggregate cap on total diversions from the residue.
- Marine died in 1984; the personal representatives made two payments under the codicil totaling $25,000.
- The Estate reported a gross estate of about $2.6 million and claimed a charitable deduction of about $2.1 million for the residuary gifts.
- The Commissioner disallowed the charitable deduction (in whole or substantial part), asserting the charitable amount was not ascertainable at death due to the codicil’s discretionary power.
- The Tax Court sustained the deficiency determination; the Estate appealed.

## Issues

1. Whether the Estate was entitled to an estate-tax charitable deduction under I.R.C. § 2055 for residuary bequests to charities when a codicil gave the personal representatives broad discretion to make noncharitable distributions that could reduce the residue.
2. Whether the charitable remainder was “presently ascertainable” at the decedent’s death, or whether the possibility of diversion to noncharitable beneficiaries was more than “so remote as to be negligible.”

## Decision

- The Fourth Circuit affirmed the Tax Court.
- The court held that the codicil granted substantial, subjective discretion to divert estate assets from the charitable residue to noncharitable recipients.
- Because there was no objective standard and no aggregate cap limiting potential diversions, the value passing to charity was not presently ascertainable at death.
- The modest post-death exercise of the power did not cure the defect because ascertainability is determined as of the date of death.

## Legal Principles

- A charitable deduction under I.R.C. § 2055 is allowed only to the extent the value of the charitable interest is “presently ascertainable” at the decedent’s death.
- If a fiduciary holds a power to divert principal to noncharitable beneficiaries that is not limited by an objective, ascertainable standard, the charitable remainder is not deductible unless the chance of diversion is “so remote as to be negligible.”
- The ascertainability inquiry is fixed at death; actual post-death distributions do not control deductibility when the governing instrument allowed materially broader diversions.

## Conclusion

The court denied the Estate’s claimed charitable deduction because the codicil’s broad, uncapped discretion to make noncharitable payments made the amount passing to the charitable residuary beneficiaries incapable of reliable valuation at the decedent’s death.


Estate of Marine v. Commissioner, 990 F.2d 136 (4th Cir. 1993)