Estate of Dorothy Walsh, Deceased, Charles E. Walsh, Personal Respresentative - Page 8

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                         for purposes of subsection (a), be                           
                         considered as passing to the                                 
                         surviving spouse, and                                        
                              (B) no part of the interest so                          
                         passing shall, for purposes of                               
                         paragraph (1)(A), be considered as                           
                         passing to any person other than                             
                         the surviving spouse.                                        
                    This paragraph shall apply only if such power                     
                    in the surviving spouse to appoint the entire                     
                    interest, or such specific portion thereof,                       
                    whether exercisable by will or during life,                       
                    is exercisable by such spouse alone and in                        
                    all events.                                                       
               Respondent determined and argues that the property passing             
          to Trust A does not qualify for the marital deduction because the           
          property is a terminable interest.  Respondent reaches this                 
          result mainly because, in respondent's view, the Agreement                  
          revokes the surviving spouses's right to receive income from the            
          Trust, or to appoint the Trust's property, upon incompetency.               
          The estate argues primarily that the property is not a terminable           
          interest because the surviving spouse has a general power of                
          appointment over the Trust's assets that allows the surviving               
          spouse to dispose of these assets any time before the Trust                 
          terminates on account of the surviving spouse's death or                    
          incompetency.  The estate asserts that the Agreement states                 
          clearly that the intent of the Trust's settlors was to qualify              
          Trust A for the marital deduction.  If the property is a                    
          terminable interest, the estate argues alternatively, the                   
          decedent's estate tax liability must be computed as if no                   
          completed gift of property was made to the Trust before the                 



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