- 15 -
all of the expenses of the condominium. The grantees
gave up their right to use and occupancy in return for
the decedent’s agreement to pay all of the expenses and
not look to them for contribution. The Agreement was
intended to cover only the period of time between the
first conveyance and the last conveyance.
* * * * * * *
In Guynn v United States, 437 F.2d, 71-1 USTC Par.
12,742 (4th Cir. 1971), the decedent, an eighty year
old woman, conveyed a residence to her daughter but
remained in the residence without an express agreement
that entitled her to do so, paid no rent to the
grantee, and paid for improvements and certain ex-
penses. The decedent’s grantee, her daughter, testi-
fied that the decedent’s remaining in the property was
not discussed because it was understood by all involved
that she would stay in the property until her death.
The Fourth Circuit held that the property was included
in the estate based on an implied agreement for a
retained life estate.
In [Estate of] Barlow [v. Commissioner, 55 T.C.
666 (1971)], the decedent and wife conveyed farm prop-
erty to their four children, simultaneously leasing the
property back for a share of the crops that was found
to be fair market rental. The property was not in-
cluded in the taxable estate even though for four years
the decedent did not actually pay the rent. The Court
found that the outright transfer of the property to the
children and the lease back were bona fide transac-
tions. The forbearance from collecting rent was due to
circumstances that arose later and were not contem-
plated by the parties at the time of the transaction.
The difference between Barlow and Guynn is that in
Barlow, as in this case, the decedent really trans-
ferred the entire fee without retaining a life estate.
Barlow, like the decedent here, was contractually
obligated to pay for his continuing use of the prop-
erty, no life estate having been reserved under the
transfer. Guynn simply remained in possession without
paying any quid pro quo because the parties so agreed.
She retained a life estate so Section 2036 applied.
There was no discussion or paperwork because none was
needed. [Reproduced literally.]
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011