- 8 -
The trust instrument must also prohibit distributions from
the trust to or for the benefit of any person other than the
holder of the qualified annuity interest during the term of the
qualified interest. See sec. 25.2702-3(d)(2), Gift Tax Regs.
The term of the annuity interest must be fixed by the trust
instrument “for the life of the term holder, for a specified term
of years, or for the shorter (but not the longer) of those
periods.” Sec. 25.2702-3(d)(3), Gift Tax Regs.
For purposes of section 2702, a transfer of an interest in
property with respect to which there are one or more term
interests is treated as a transfer in trust. See sec.
2702(c)(1). “A term interest is one of a series of successive
(as contrasted with concurrent) interests.” Sec. 25.2702-4(a),
Gift Tax Regs.
Petitioners’ argument, that the retained interests in the
annuities should be valued as interests for the term of 15 years
or for the lives of the grantor and spouse, is essentially the
same as the argument we rejected in Cook v. Commissioner, supra,
a case with nearly identical facts to those of the cases at hand.
In Cook, the taxpayers, husband and wife, each created two
GRAT’s. The grantor of each GRAT retained an annuity for a
stated term of years. If the grantor died before the expiration
of the stated term of years and was survived by the spouse, the
annuity continued for the spouse until the earlier of his or her
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011