Estate of Pickard v. Commissioner

Claire Pickard died and bequeathed her residuary estate to the Pickard Trust. Her stepfather, Herbert Peterson, had a vested remainder in the Pickard Trust. He died before Pickard, and his will left his residuary estate to the Peterson Trust, which indicated that a pair of tax-exempt organizations would receive the trust corpus after the death of certain family members. When Pickard’s estate (plaintiff) filed an estate-tax return, it claimed a charitable deduction for the amount of her estate that eventually passed to the Peterson Trust and would eventually be received by the two qualified charities. The Commissioner of Internal Revenue (the commissioner) (defendant) disallowed that deduction. There was no disagreement about the tax-exempt character of the two organizations and the amount of the deduction in question. The sole issue was whether the Pickard estate could claim the deduction. The tax regulation in question provided that in order to claim the deduction, (1) the decedent had to make a transfer, (2) the transfer had to be property includable in the gross estate, and 3) the transfer had to be for the use of a qualified Internal Revenue Code § 501(c)(3) entity. The estate believed that the transfer in question satisfied the regulation, but the government disagreed with this interpretation, as Pickard had willed her estate merely to the Pickard Trust, not to the charitable entities herself.