- 11 - resolution of potentially complex subsidiary issues. For instance, in order to determine the amount that may be subtracted, the following are among the questions that must be addressed: The nature of the interest “retained” by the grantor, the extent to which that interest is “qualified”, and the actuarial value of the qualified interest. A. The Nature of the Interest Retained Commencing with the threshold inquiry of what interest or interests petitioner “retained”, we conclude that, even if we were to view the GRAT indentures as creating separate interests in favor of petitioner and petitioner’s estate, both such interests must be construed as retained by petitioner. It is axiomatic that an individual cannot make a gift to himself or to his or her own estate. An attempt to do so has long been treated at common law as a retention by the individual of the interest purportedly transferred. For example, 1 Restatement, Trusts 2d, section 127 comment b (1959), states: Where the owner of property, whether real or personal, transfers it in trust to pay the income to himself for a period of years and at the expiration of the period to pay the principal to him, he is the sole beneficiary of the trust. He is likewise the sole beneficiary where he transfers property in trust to pay the income to himself for life and on his death to pay the principal to his estate, or to his personal representatives. * * * Hence, because petitioner could not as a matter of law give an interest in property to her estate, she by default retained allPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011