Audrey J. Walton - Page 11

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          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 all             

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