## Facts

- Norman H. Vissering’s mother created an inter vivos trust that became irrevocable at her death in 1965; the trust was governed by Florida law.
- Vissering and a bank served as co-trustees.
- Vissering was entitled to all trust income for life.
- Upon Vissering’s death, the trust remainder was to be divided into shares for his two children or held for their benefit.
- The trust authorized the trustees to distribute principal for a beneficiary in whatever amounts, in the trustees’ discretion, were “required for the continued comfort, support, maintenance, or education” of the beneficiary.
- Vissering developed Alzheimer’s disease, entered a nursing home in 1984, and was adjudicated incapacitated in New Mexico shortly before his death; he did not formally resign as trustee.
- The Commissioner asserted that, at death, Vissering held a general power of appointment over the trust corpus, requiring inclusion of trust assets in his gross estate under I.R.C. § 2041.
- The Tax Court agreed with the Commissioner; the estate appealed.

## Issues

1. Whether Vissering ceased to be a trustee before death due to incapacity and the absence of formal removal or resignation, such that he held no relevant power at death under I.R.C. § 2041.
2. Whether the co-trustees’ authority to distribute principal “required for the continued comfort, support, maintenance, or education” of a beneficiary constituted a general power of appointment under I.R.C. § 2041, or instead was limited by an ascertainable standard relating to health, education, support, or maintenance.

## Decision

- The Tenth Circuit reversed the Tax Court.
- Assuming (without deciding) that Vissering remained trustee and was fully competent at death, the court held that the invasion power was not a general power of appointment under I.R.C. § 2041.
- The trust corpus was not includible in Vissering’s gross estate under § 2041 because the distribution authority was limited by an ascertainable standard.

## Legal Principles

- State law determines the nature and scope of interests and powers created by a trust instrument; federal law determines the federal tax consequences of those interests and powers.
- Under I.R.C. § 2041(b)(1)(A), a power is not a “general power of appointment” to the extent it is limited by an ascertainable standard relating to health, education, support, or maintenance.
- Trust language permitting distributions only in amounts “required” for a beneficiary’s “continued comfort, support, maintenance, or education” can supply an objective, enforceable limitation comparable to “support in reasonable comfort” under the Treasury regulations.
- The term “comfort” is not necessarily open-ended when constrained by modifiers such as “required” and “continued,” and when read with related terms (support, maintenance, education) that point to maintaining the beneficiary’s accustomed standard of living.
- Fiduciary obligations and co-trustee oversight are relevant in assessing whether a trustee’s discretionary invasion power is effectively unrestricted for § 2041 purposes.

## Conclusion

The court held that a co-trustee’s power to invade trust principal only as “required for the continued comfort, support, maintenance, or education” of a beneficiary is limited by an ascertainable standard and therefore does not create a taxable general power of appointment under I.R.C. § 2041, even assuming the decedent retained the trusteeship until death.


Estate of Vissering v. Commissioner, 990 F.2d 578 (10th Cir. 1993)