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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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