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payments. This section does not limit the Trustee’s
powers and must be construed to enable the Trustee to
give each beneficiary the fullest possible benefit and
enjoyment of all of the trust income and principal to
which the beneficiary is entitled.
5. State Law
Section 27 of the trust agreement, “Applicable Law”,
provides that all questions concerning construction, validity,
and administration of the trust shall be determined in accordance
with Arkansas law.
Discussion
A. Applicable Law
1. Marital Deduction
Section 2001 imposes a tax on the transfer of the taxable
estate of all decedents who are citizens or residents of the
United States. The amount of the tax is determined, in part, by
the value of the taxable estate. Sec. 2001(b). Section 2051
defines the value of the taxable estate as the gross estate less
deductions. “For estate taxes, as for income taxes, ‘Deductions
are a matter of legislative grace, and a taxpayer seeking the
benefit of a deduction must show that every condition which
Congress has seen fit to impose has been fully satisfied.’”
Estate of Nicholson v. Commissioner, 94 T.C. 666, 681-682 (1990).
Pursuant to section 2056(a), the estate may claim, as a
marital deduction, the value of property passing to the surviving
spouse. As a general rule, the marital deduction is denied for a
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Last modified: May 25, 2011