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3. Whether the marital deduction is reduced under section
2056(b)(4) by the amount of Federal estate tax paid by the
revocable trust with property that would otherwise pass to
decedent’s surviving spouse. We hold that it is.
Section references are to the Internal Revenue Code in
effect as of the date of decedent’s death. Rule references are
to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
A. Decedent and His Family
Decedent died on June 20, 1990. He was domiciled in
Illinois on that date. Decedent was survived by his wife (Ann
Lurie) and six minor children. Ann Lurie, the executor of
decedent’s estate, lived in Winnetka, Illinois, when the petition
was filed.
B. Trusts Created Before Decedent Executed the Will
1. Notice Trusts
a. LF Trusts
Decedent’s mother created 10 Robert Lurie Family Trusts (LF
Trusts) in May 1969. On February 3 and 5, 1990, decedent
exercised his limited powers of appointment over the LF Trusts to
create 6 trusts, 1 for the benefit of each of his six children,
to succeed and receive the assets of the 10 LF trusts.
Decedent’s six children were the sole beneficiaries of the six
successor trusts. The LF trusts contain no provision for the
payment of Federal estate tax from trust assets.
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