State, Indiana Department of Revenue, Inheritance Tax Division v. Monroe County State Bank

ROBERTSON, Judge.

This appeal arises out of a dispute as to whether the exercise in a will of a power of appointment over the corpus of a trust is a taxable transfer for inheritance tax purposes.

The facts are not in dispute. Edward W. Krause died testate. His will contemplated the creation of a trust with the Monroe County State Bank (Bank) as trustee. The trust set up was a typical federal marital deduction trust in which the surviving spouse, Vivian C. Krause (decedent), was given a life estate or the right to the income from the corpus for life. This was coupled with a general power of…