Estate of Henry A. Lassiter, deceased, Paula Ann Masters Lassiter, administrator, C.T.A. - Page 47

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               not result in a failure to satisfy the requirement of                    
               section 2056(b)(7)(B)(ii)(II). * * * [Sec. 20.2056(b)-                   
               7(d)(6), Estate Tax Regs.]                                               
          Hence, the estate’s deduction will not be disallowed on the basis             
          of this power.                                                                
               Concerning the trustee’s power to use principal for the                  
          support and education of the Lassiter children, we find that the              
          descendants effectively disclaimed any right to receive under                 
          this power.  Their situation parallels that recognized for                    
          marital deduction purposes in section 20.2056(b)-7(h), Example                
          (4), Estate Tax Regs:                                                         
               Example 4.  Power to distribute trust corpus to other                    
               beneficiaries.  D’s will established a trust providing                   
               that S is entitled to receive at least annually all the                  
               trust income.  The trustee is given the power to use                     
               annually during S’s lifetime $5,000 from the trust for                   
               the maintenance and support of S’s minor child, C.  Any                  
               such distribution does not necessarily relieve S of S’s                  
               obligation to support and maintain C.  S does not have                   
               a qualifying income interest for life in any portion of                  
               the trust because the bequest fails to satisfy the                       
               condition that no person have a power, other than a                      
               power the exercise of which takes effect only at or                      
               after S’s death, to appoint any part of the property to                  
               any person other than S.  The trust would also be                        
               nondeductible under section 2056(b)(7) if S, rather                      
               than the trustee, held the power to appoint a portion                    
               of the principal to C.  However, in the latter case, if                  
               S made a qualified disclaimer (within the meaning of                     
               section 2518) of the power to appoint to C, the trust                    
               could qualify for the marital deduction pursuant to                      
               section 2056(b)(7), assuming that the power is personal                  
               to S and S’s disclaimer terminates the power.                            
               Similarly, in either case, if C made a qualified                         
               disclaimer of C’s right to receive distributions from                    
               the trust, the trust would qualify under section                         
               2056(b)(7), assuming that C’s disclaimer effectively                     
               negates the trustee’s power under local law.                             

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Last modified: May 25, 2011