Estate may adopt wait-and-see approach and determine amount of QTIP on date of election

Article Abstract:

The Sixth Circuit overturned a Tax Court ruling in Estate of Spencer to support the taxpayer's delay in determining a qualified terminable interest property trust's amount until the election was made. The Court felt that the wait-and-see attitude was consistent with Congress' intent to ease marital deduction requirements as well as finding it illogical to determine IRC section 2056(b)(7) compliance before the election as the situation might change. However, estate planners may want to use disclaimers until the decision is confirmed by other courts.

Commercial Banks, Trust, Fiduciary, and Custody Activities, Estate & Tax Planning, United States

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QTIP election cannot be subject to executor's discretion whether to make the election

Article Abstract:

The Tax Court upheld the IRS' position in Robertson, Estate of concerning the ineligibility of the deceased's property as qualified terminable interest property (QTIP) because an executor had discretion over allocating the property. QTIP rules require that no one can gift the property to someone other than the surviving spouse and so the will, which allowed the executor to determine whether to gift the spouse and claim the marital deduction, violated those rules because the executor could choose to gift another.

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QTIP was disallowed because of executors' discretion whether to make the election

Article Abstract:

The Tax Court has held in Estate of Clayton that property that is held in trust for a surviving spouse cannot be considered QTIP at the decedent's time of death. This means that the estate cannot claim a marital deduction. The property cannot be QTIP if the decedent's will allows co-executors to make the QTIP election and if they do not make the election.

Analysis, Management, Tax elections, Executors and administrators, Executors

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