Estate of Claude C. Focardi, Deceased, Nina M. Focardi, Personal Representative - Page 9

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               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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Last modified: May 25, 2011