- 29 -
In other words, section 2056(a) generally allows an unlimited
deduction against estate tax liability for property transferred
to a surviving spouse, but section 2056(b)(1) creates an
exception denying the deduction when the spouse’s interest takes
a form, such as a life estate in trust, which will terminate in
favor of another beneficiary. Section 2056(b)(7) is among
several exceptions to the exception and allows a deduction for
so-called QTIP, qualified terminable interest property.
In the matter before us, the parties do not dispute that an
interest in the Item V trust passed to Mrs. Lassiter from
decedent or that a timely QTIP election was made on the estate
tax return. At issue then is whether such interest constitutes a
qualified income interest for life. Furthermore, since the
estate, appropriately, does not contend that the Item V trust as
originally set forth in the 1970 will qualifies for the marital
deduction, the dispositive issue can be framed more specifically
as whether the 1995 disclaimers render the trust eligible for
QTIP treatment.
Regulations promulgated under section 2056 contemplate that
disclaimed property may be treated as passing to the surviving
spouse within the meaning of the statute. Section 20.2056(d)-
2(b), Estate Tax Regs., provides in this regard:
If an interest in property passes from a decedent to a
person other than the surviving spouse, and the
interest is created in a transfer made after December
31, 1976, and--
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011