(1) As used in this section:
(a) “Marital deduction” means the federal estate tax deduction allowed for transfers under section 2056 of the Internal Revenue Code, as in effect on January 1, 2006, or the federal gift tax deduction allowed for transfers under section 2523 of the Internal Revenue Code, as in effect on January 1, 2006.
(b) “Marital deduction gift” means a transfer of property that the settlor intended to qualify for the marital deduction.
(2) If a trust contains a marital deduction gift:
(a) The provisions of the trust, including any power, duty or discretionary authority given to a fiduciary, must be construed as necessary to comply with the marital deduction provisions of the Internal Revenue Code.
(b) The fiduciary may not take any action or have any power that impairs the tax deduction for the marital deduction gift.
(c) The marital deduction gift may be satisfied only with property that qualifies for the tax deduction.
(3) If a trust executed before September 12, 1981, indicates the settlor intended that a gift provide the maximum allowable marital deduction, the trust gives the recipient an amount equal to the maximum amount of the marital deduction that would have been allowed as of the date of the gift under federal law as it existed before September 12, 1981, with adjustments for:
(a) The provisions of section 2056(c)(1)(B) and (C) of the Internal Revenue Code in effect immediately before September 12, 1981.
(b) Reduction of the amount passing under the gift by the final federal estate tax values of any other property that passes under the trust, or by other means, that qualifies for the marital deduction. This paragraph does not apply to qualified terminable interest property under section 2056(b)(7) of the Internal Revenue Code, as in effect on January 1, 2006.
(4) If a marital deduction gift is made in trust:
(a) The settlor’s spouse is the only beneficiary of income or principal of the marital deduction property as long as the spouse lives. Nothing in this paragraph prevents exercise by the settlor’s spouse of a power of appointment included in a trust that qualifies as a general power of appointment marital deduction trust.
(b) Subject to paragraph (d) of this subsection, the settlor’s spouse is entitled to all of the income of the marital deduction property at least once a year, as long as the spouse is alive.
(c) The settlor’s spouse has the right to require that the trustee of the trust make unproductive marital deduction property productive or convert it into productive property within a reasonable time.
(d) Notwithstanding any provision of ORS chapter 129, upon the death of the settlor’s spouse all remaining accrued or undistributed income from qualified terminable interest property under sections 2056(b)(7) or 2523(f) of the Internal Revenue Code, as in effect on January 1, 2006, passes to the estate of the settlor’s spouse, unless the trust provides a different disposition that qualifies for the marital deduction.
(5)(a) Except as provided in paragraph (b) of this subsection, if a trust that makes a marital deduction gift includes a requirement that the settlor’s spouse survive the settlor by a period of more than six months, or contains provisions that could result in a loss of the spouse’s interest in the trust if the spouse fails to survive the settlor by at least six months, the spouse need only survive the settlor by six months to receive the marital deduction gift.
(b) If a trust that makes a marital deduction gift includes a requirement that the settlor’s spouse survive a common disaster that results in the death of the settlor, the spouse need only survive until the final audit of the federal estate tax return for the settlor’s estate, if any, to receive the marital deduction gift.
(6) A trustee is not liable for a good faith decision whether to make any election referred to in sections 2056(b)(7) or 2523(f) of the Internal Revenue Code, as in effect on January 1, 2006.
(7) Subsections (4) and (6) of this section do not apply to a trust that qualifies for the marital deduction under section 20.2056(e)-2(b) of the Code of Federal Regulations, as in effect on January 1, 2006. [Formerly 128.398]
CREDITOR’S CLAIMS; SPENDTHRIFT AND DISCRETIONARY TRUSTS
Section: Previous 130.205 130.210 130.215 130.220 130.225 130.230 130.235 130.240 130.300 130.305 130.310 130.315 130.320 130.325 130.350 NextLast modified: August 7, 2008