-11-
increase of more than 35 percent over its reported value. They
also agreed that her interest in MHC Land and Cattle was worth
$6,751,404.63, an increase of more than 60 percent over its
reported value. This means that the total value of the gross
estate was $9,578,895.93 instead of $6,512,223.20.
If the disclaimer were applied to this increased value,
property with a fair market value of $2,421,671.95 would pass to
the Trust and property with a fair market value of $807,223.98
would pass to the Foundation.6 The estate asserts that this
increase in value entitles it to an increase in the charitable
deduction--both for the entire part passing to the Foundation
and also the increased value of the Trust’s annuity interest.
The Commissioner concedes one point--he is now willing to
allow the estate the $40,555.80 reported on the return as going
to the Foundation. But he still objects to any deduction for the
property passing to the Trust, and now he contests any increase
in the deduction for the property passing to the Foundation.
OPINION
I. The Disclaimer in Favor of the Trust
We begin with the basics. Under the Trust agreement, the
Foundation has the right to guaranteed annuity payments for the
6 The lawyer hired to handle the estate’s administration
testified at trial that he will file a petition with the probate
court after the resolution of this case. That petition will
describe what happened here, and only then will he ask the
probate court to approve distributions to the beneficiaries.
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Last modified: March 27, 2008