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In each of these examples, only the retained interest for
the shorter of a term of years or the transferor’s life is fixed
and ascertainable at the creation of the interest, and is
therefore a qualified interest under section 2702. In Example
(5) and Example (6) above, the unitrust interests that may be
paid to A’s estate are both contingent upon A’s death before the
completion of the 10-year fixed term, and are therefore not
qualified interests. In the trusts before us, the spousal
interests are not fixed and ascertainable at the creation of the
trusts but, rather, are contingent in each case upon the spouse’s
surviving the grantor. For this reason, the spousal interests
are not qualified interests and therefore must be valued as zero
under section 2702(a)(2)(A).
Legislative history reflects that Congress was “concerned
about potential estate and gift tax valuation abuses”,
specifically, “undervaluation of gifts valued pursuant to
Treasury tables.” 136 Cong. Rec. S15629, S15680-S15681 (daily
ed. Oct. 18, 1990). As explained by the lawmakers in the context
of trusts and term interests in property: “Because the taxpayer
decides what property to give, when to give it, and often
controls the return on the property, use of Treasury tables
undervalues the transferred interests in the aggregate, more
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