Thomas Bowles died in 1988. His will created two trusts, a qualified terminable interest property trust (the QTIP Trust), and a Grandchildren’s Trust. Bowles’s surviving spouse, Mary Bowles, was appointed trustee of the QTIP Trust in 1989. At that time, the trust assets had a value of some $15 million. Ms. Bowles apparently also acted as trustee for the Grandchildren’s Trust.
Under the terms of the QTIP Trust, the trustee had the authority to distribute the net income of the trust to Ms. Bowles during her lifetime. The trustee was also authorized to make payments of principal to Ms. Bowles as necessary for her health, support, and maintenance. Thus, Ms. Bowles, as trustee, controlled payments of trust income and distributions of trust principal to herself.
