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executor's making of the QTIP election does not diminish the
power.
The Court of Appeals for the Fifth Circuit attempts to
circumvent the prohibition against the executor's having such a
power during the period prior to making the election by applying
a relation-back legal fiction. The Fifth Circuit stated:
although the effect of the election is tested as of the
instant of the testator's death, the definitional
eligibility of the separate terminable interest under
examination is tested as though QTIP election had
already been made.
Estate of Clayton v. Commissioner, 976 F.2d at 1497. "The
question is not when those determinations are made or when those
acts are performed but whether their effects relate back, ab
initio, to the moment of death." Id. at 1498. "[L]ike other
estate tax elections (and other exceptions to the terminable
interest rules), the effect of the QTIP election is retroactive
to the instant of death, irrespective of when it is actually
made." Id. at 1495. Thus, the Fifth Circuit ignores the power
of appointment vested in the executor during the period from the
date of the decedent's death to the date of making of the
election by creating a "relation-back" legal fiction.
The Court of Appeals for the Fifth Circuit likened the QTIP
election to a qualified disclaimer by the surviving spouse and
stated:
For example, a qualified disclaimer by the Surviving
Spouse has precisely the effect of the QTIP election
here: Both are volitional acts; both can be made only
after the death of the testator; both relate back, ab
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