their own uncontrolled discretion may determine.
(e) The Trustees shall be empowered to abandon any property, real or personal, which they consider not worthy of retention and maintenance.
(f) The Trustee may loan money upon such terms and conditions as he shall determine to any individual who is then a beneficiary of the trust estate or who might on any contingency thereafter become such beneficiary."
The plaintiff further contends that even in view of the powers provided for above, the corpus of the trust cannot be diverted from the charitable to the noncharitable beneficiaries unless the trustee exercises his discretionary administrative powers in such a manner as to commit a flagrant breach of his fiduciary obligations, a result which is prevented by the law of New Jersey which governs this testamentary trust.
The court has pointed out, supra, that with respect to the transfer of a remainder interest to a charitable institution where there is an intervening life estate, § 20.2055 sets forth the so-called ascertainability requirement upon which the Commissioner relies. The purpose of that requirement is to attempt to insure that the charitable remainder interest will receive at least the amount of the charitable deduction. Miami Beach First Nat'l Bank v. United States, 69-1 T.C. para. 12,627 (S.D.Fla.1969), on appeal to 5th Cir. Consequently, pursuant to § 20.2055, a power which is not limited by an ascertainable standard results in the loss of the charitable deduction. However, this court is of the opinion that the existence of discretionary administrative powers present in the case at bar is not the equivalent of an unlimited power of invasion and does not render a charitable remainder interest nondeductible. Federal courts throughout the country have consistently so held. See Peoples Trust Co. of Bergen County v. United States, 311 F. Supp. 1197 (D.N.J.1970) on appeal to 3d Cir.; Bankers Trust Co. v. United States, 308 F. Supp. 545 (S.D.N.Y.1970); Gardiner v. United States, 69-2 U.S.T.C. para. 12,628 (D.Ariz.1969), on appeal to 9th Cir.; Miami Beach First Nat'l Bank v. United States, supra; Estate of Phyllis W. McGillicuddy, 54 T.C. 315 (1970); Estate of Lillie MacMunn Stewart, 52 T.C. 830 (1969), on appeal to 3d Cir.
Furthermore, it is clear that in New Jersey the trustee of a trust having both life beneficiaries and remaindermen cannot exercise his discretionary investment powers in such a manner so as to favor the life beneficiaries at the expense of the remaindermen or vice-versa. Clearly his duty is to administer the trust with due regard to the respective interests of the successive beneficiaries. See Cohen v. First Camden Nat'l Bank & Trust Co., 51 N.J. 11, 237 A.2d 257 (1967); In re Koretzky, 8 N.J. 506, 86 A.2d 238 (1951); Pennsylvania Co. for Insurance on Lives and Granting Annuities v. Gillmore, 137 N.J.Eq. 51, 43 A.2d 667 (Ch.1945). Judge Coolahan's opinion in Peoples Trust Co., supra, is illuminating on this point. There also, the United States was concerned about the trustee using its power to invade the corpus to the detriment of a charitable remainder. However, in light of the principles of law referred to above, the court concluded that "* * * the trustee's duty to the charitable beneficiary negates the notion that any invasion of corpus, as foreseen by the defendant, could occur * * *." This court has reached the same conclusion.
Additionally, as the plaintiff has pointed out, it cannot be assumed that the trustee will exercise his powers in breach of his fiduciary responsibility. It must be assumed that since it is required under the law of New Jersey, he will exercise his powers in a way which will not favor the life beneficiary over the remaindermen. If he did so exercise his powers, the remaindermen or the Attorney General, acting on their behalf, could prevent such action and compel the trustee to discharge his fiduciary duty to preserve the charitable remainders.
Accordingly, the plaintiff's motion for summary judgment is granted and the defendant's cross motion for summary judgment is denied. Counsel for the plaintiff shall submit an appropriate order in conformity with the foregoing.