-18-
overvaluation, and the gift of the remainder would have the
potential for undervaluation. We consider such treatment to be
contrary to the lawmaker’s intent for section 2702. See id.
This Court and the Court of Appeals for the Seventh Circuit
opined on the subject matter at hand in Cook v. Commissioner,
supra. The Court of Appeals for the Ninth Circuit did not
acknowledge disagreement with Cook but distinguished Cook on the
ground that Cook, unlike Schott, involved an expressed
contingency that the spouses remain married at the time of the
grantor/spouse’s death. In Cook, the GRATs stated that an
annuity would be paid to the grantor until the earlier of 5 years
or the grantor's death. If the grantor survived the 5-year term,
the remaining trust property would pass to a separate trust
benefiting the grantor’s son. If the grantor died before the end
of the 5-year term and was married to the grantor’s spouse at the
time of death, all remaining trust property would pass to a
contingent marital annuity trust, pursuant to which the grantor’s
spouse would receive the annuity amount for the balance of the
5-year term. Upon the earlier of the end of the 5-year term or
the death of the grantor's spouse, the remaining trust assets
would pass to a separate trust benefiting the grantor's son. The
grantor reserved the power to revoke the successor interest of
the spouse.
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