Palumbo v. United States
United States District Court for the Western District of Pennsylvania
788 F. Supp. 2d 384 (2011)
- Written by Tom Squier, JD
Facts
In 1974, Antonio Palumbo created the A.J. and Sigismunda Palumbo Charitable Trust (the charitable trust). At the time of Palumbo’s death, in 2002, the most current will (with codicils) in effect was one drafted in 1999. The 1999 will omitted a residuary clause, even though earlier versions of the will had always included the charitable trust as the sole residuary beneficiary. Palumbo’s son sued, claiming that because there was no residuary clause in the probated will, he was the intestate heir and was entitled to the entire residuary estate. The charitable trust contested that claim. The parties stipulated that the omission of the residuary clause in 1999 was a scrivener’s error by Palumbo’s attorney. The interested parties entered into a settlement agreement regarding the dispute, with a portion of the residuary estate ($11,721,141.00) going to the charitable trust and the remainder going to the son. Palumbo’s estate (plaintiff) filed a claim for a charitable deduction in the amount of $11,721,141.00 for federal estate taxes. The Internal Revenue Service (IRS) (defendant) disallowed the charitable deduction on the theory that Palumbo’s son was the sole legatee to the estate and that the distribution to the charitable trust was a payment from the son. The estate sued to recover a refund of the taxes that had been paid based on that IRS decision.
Rule of Law
Issue
Holding and Reasoning (Schwab, J.)
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