Estate of Merle Allen Whiting, Jr., Deceased, Vicki Ann Whiting, Executrix - Page 15

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               B.   Whether the Marital Deduction Trust Meets the                     
                    Requirements of Section 2056(b)(7)                                
               For the property in the marital deduction trust to be QTIP,            
          it must be property:  (1) which passes from the decedent; (2) in            
          which the surviving spouse has a qualifying income interest for             
          life; and (3) as to which an election has been made.  Sec.                  
          2056(b)(7)(B)(i).  The parties agree that the property passed               
          from decedent and that a proper QTIP election was made.                     
          Respondent also states in his brief that “the requirements of               
          * * * [section 2056(b)(7)] for treating the property that funded            
          the Marital Deduction Trust as deductible initially appear to be            
          met by the provisions of Section 8.  This includes the                      
          requirement that the surviving spouse be entitled to all of the             
          net income produced by the trust’s corpus.”  We also note that in           
          section 8 of the marital deduction trust, the trustee is directed           
          to distribute the net income “at least annually”, as provided by            
          the statute.  Additionally, any income accrued but undistributed            
          at the surviving spouse’s death shall be paid to the surviving              
          spouse’s estate.                                                            
               The issue is whether the terms of section 15 of the trust              
          agreement, the disability section, which are incorporated into              
          the marital deduction trust by section 8.D. of the trust                    
          agreement, restrict the surviving spouse’s “qualifying income               
          interest for life” under section 2056(b)(7)(B)(i)(II).  As                  
          discussed below, we find that the conflicting terms of sections 8           

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