The Republican. [volume] (Oakland, Md.) 1877-current, 1953-07-02
Trustees Under No
Duty To Pay

The clause in the pre-nuptial
agreement was modified to read
that she receive $4,000 within a
year and every year thereafter dur
ing her life the sum of SAFEST
monthly In case she remarked the
sum was to be reduced to $500
or S20833 per month.
There was new paragraph in
the new agreement as to taxes
which declared The parties of the
first and second parts agree that
/ payments to be made to the party
! of the third part under said ante
nuptial agreement as now ratified
and confirmed by party of the
third part shall be made without
deduction for any state or federal
inheritance or succession taxes and
agrees to pay, indemnify and pro-
tect said party of the third part
from the payment of the same"
The Judge noted here 1T will be
noted there is no provision regard
ing federal or state income taxes.
Therefore it would seem that the
Trustees should pay on the income
of the trust estate the proper fed
eral and state income taxes and
that Mrs. Offutt should make such
report to the same authorities and
pay such tax as should properly
! be due on the $4,000 she receives
All can decide here is that the
Trustees are under no duty to her
under the new settlement agree
ment to pay income taxes either
federal or state on the $4,000 which
she gets from them annually"
He asserted further, however,
that it was still necessary to pass
on the nature of the $4,000 annual
payments, and to decide whether
they are properly payable from in
come or from principal.
The trustees denied her claim
that payments constituted a charge
upon corpus of the trust estate and
in no sense could be considered as
income earned or to be earned by
her They declared the payments of
$4,000 had always been made from
income from the principal. and had
been so reported by them and so
charged by the auditor without OBJ
lection.
Judge Henderson declared Mrs.
Offutt seemed to have been under
the impression that not only she
needed to pay no income taxes but
that she need make no reports. At
the hearing it was brought out that
she had turned over to her counsel
various unopened letters from the
Internal Revenue Service.
At the hearing also it was brought
out that if there was not sufficient
income to pay the $4,000 that any
amount needed would have to be
paid out of the principal; that in
+ the new agreement there was no
stipulation that the $4,000 be paid
only if the income was sufficient,
| but that she was entitled to this
even if the income should not be
sufficient.
Nature of An Annuity
In this vein the Judge said he
must decide that the $4,000 pay
/ ment is in the nature of an annuity,
chargeable against the whole trust
estate, and payable from the prin-
cipal, at least if necessary in order
to give her the full amount to which
! she is entitled.
He declared it seemed proper to
authorize counsel for the trustees
and counsel for Mrs. Offutt to con-
fer Immediately with Federal and
State income tax officials in order
to reach an understanding as to
how income taxes should be paid
in the future, and what can be done
about the assessment imposed on
Mrs. Offutt for past due taxes.
The present situation, he said,
leaves Mrs. Offutt in straitened cir
] cumStanceS. and that further delav