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Ansell L. Nowell (Mr. Nowell), decedent's predeceased
husband, had established the A.L. Nowell Trust on April 20, 1990,
contributing his one-half community property interest in the
publicly traded securities and real estate to the trust and
naming himself and Mr. Prechel as cotrustees. Upon Mr. Nowell's
death on April 26, 1990, the A.L. Nowell Trust estate was
distributed into three trusts: The Decedent's Trust, the
A.L. Nowell Qualified Interest Trust-exempt (QTIP trust-exempt),
and the A.L. Nowell Qualified Interest Trust-nonexempt (QTIP
trust-nonexempt). The QTIP trust-exempt and the QTIP trust-
nonexempt are referred to collectively herein as the QTIP trusts.
Decedent and Mr. Prechel were cotrustees of each trust at
decedent's death.
The property in the QTIP trusts was to be held for the
benefit of decedent during her lifetime, with the remaining
property interests to be distributed to Mr. Prechel and
Ms. Prechel (in trust) at decedent's death. In Mr. Nowell's
estate, the property that was held by the QTIP trusts was treated
as qualified terminable interest property (QTIP property)
pursuant to section 2056(b)(7). Accordingly, Mr. Nowell's
executor made the appropriate election, and his estate claimed a
marital deduction in the amount of $808,046 attributable to the
QTIP property. The deduction was not disallowed for Federal
estate tax purposes.
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