- 12 -
market value of the property transferred to the trust as finally
determined for Federal tax purposes. See sec. 25.2702-
3(b)(1)(ii), Gift Tax Regs. In either case, a fixed amount must
be payable periodically but not less frequently than annually.
See id.
The trust instrument must also prohibit distributions from
the trust to or for the benefit of any person other than the
holder of the qualified annuity interest during the term of the
qualified interest. See sec. 25.2702-3(d)(2), Gift Tax Regs.
The term of the annuity interest must be fixed by the trust
instrument for the life of the term holder, for a specified term
of years, or for the shorter (but not the longer) of those
periods. See sec. 25.2702-3(d)(3), Gift Tax Regs.
For purposes of section 2702, a transfer of an interest in
property with respect to which there are one or more term
interests is treated as a transfer in trust. See sec.
2702(c)(1). A term interest is one of a series of successive (as
contrasted with concurrent) interests. See sec. 25.2702-4(a),
Gift Tax Regs.
II. Application
As previously stated, section 2702 contains special
valuation rules for transfers of interests in trusts to family
members. In this case, we proceed on the assumption that each
trust creates interests which consist of the right to receive
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011