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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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