-9-
absence of such an appointment, the remaining trust
assets shall be distributed to my estate.
* * * * * * *
ARTICLE SIX: Ultimate Distribution. Upon the
expiration of the Annuity Term, all the remaining
income and principal of this trust, if any, are to be
divided into equal shares and distributed outright and
free of trust to my then living children. If a child
of mine predeceases me, his or her share is to be
distributed to his or her estate.
1The decedent GRATs state that “References to ‘my wife’
means [sic] NINA M. FOCARDI.”
Each of the instruments establishing the Focardi GRATs has
dispositive provisions similar to the quoted parts of the
decedent GRATs, except that (1) the word “wife” is used in lieu
of “husband”, and the word “husband” is used in lieu of “wife”,
(2) changes have been made to gender-related pronouns, and
(3) Article Five B states that “Trustee shall administer and
distribute” in lieu of “Trustee shall distribute”.
Discussion
A tax is generally imposed on a taxpayer’s transfer of
property by gift. See sec. 2501(a)(1). The amount of the gift
equals the fair market value of the transferred property as of
the date of the gift. See sec. 2512(a); sec. 25.2512-1, Gift Tax
Regs. Where property is transferred in trust with the donor
retaining an interest in the property,3 the value of the gift
3 For purposes of sec. 2702, when a transferor retains the
right to revoke a qualified annuity interest of the transferor’s
(continued...)
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