Holtz's Estate v. Commissioner
United States Tax Court
38 T.C. 37 (1962)
Leon Holtz funded a trust that paid him income for life and let the trustee bank invade the principal, in its discretion, for his "welfare, comfort and support" or "hospitalization or other emergency needs," with the remainder passing to his surviving spouse under the same terms; Leon reserved no right to amend or revoke the trust. The Commissioner (defendant) treated Leon's 1953 and 1955 transfers to the trust as taxable gifts, but Leon's estate (plaintiff) argued they were not completed gifts, pointing to a conversation in which a trust officer assured Leon he would be "liberal" in distributing principal back to him if needed.
Whether transfers to a trust are subject to gift tax when the settlor retains no right to revoke or amend the trust, but the trustee has discretionary power to invade the corpus governed by an external standard enforceable by a court.