- 46 -
marital deduction should be allowed, because the Trustees
had a fiduciary duty to * * * [Mrs. Rapp] to comply with
the QTIP rules." Petitioner's post-trial brief further
states as follows:
Petitioner submits that the Trustees were under a
fiduciary duty to commit to pay all of the income
to Laura [i.e., Mrs. Rapp], both because of her
need to receive such income and because it would
be detrimental to her legitimate interests under
the Will to pay a large estate tax at the
Decedent's death.
The thrust of petitioner's argument is that the
trustees are bound to pay all of the income of the trust to
Mrs. Rapp because otherwise the trust would not qualify for
the marital deduction and the estate would be liable for
estate taxes of more than $2 million, and that would be
contrary to Mrs. Rapp's best interests. Petitioner argues
that Mrs. Rapp, thus, had a "qualifying income interest for
life" in the trust, as required by section 2056(b)(7)(B)
(ii), and the trust property qualifies as QTIP.
In support of this argument, petitioner cites section
16081(a) of the California Probate Code, under which
trustees are directed to "act in accordance with fiduciary
principles and * * * not act in bad faith" even if a trust
instrument confers absolute, sole, or uncontrolled
Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 NextLast modified: May 25, 2011