De Oliveira v. United States

Jose de Oliveira, Sr., created a last will and testament that in turn created a testamentary trust that benefited his wife, Serafina, as the lifetime beneficiary and trustee. The trust was created to hold Jose’s half of the community property that he shared with his wife. Jose’s trust document said that the assets left to Serafina were “for [her] benefit” and “for support,” but it did not define those terms or limit Serafina’s use of the assets in any way. Jose died in 1956, and the testamentary trust for Serafina was funded. In 1972, Serafina created a document titled “Power of Attorney,” in which she agreed to manage all her property via majority votes among her children. Serafina died in 1978, and the executor of her estate, Jose de Oliveira, Jr. (plaintiff) did not include the value of the trust assets from Jose in Serafina’s gross estate. The Internal Revenue Service (IRS) (defendant) audited the estate and determined that the value of the trust assets should have been included in Serafina’s estate. The IRS cited § 2041 of the Internal Revenue Code, which said that if a person held a general power of appointment over assets, those assets must be included in the person’s gross estate. The district court denied the estate’s petition for a refund and granted the IRS’s motion for summary judgment. The estate appealed.