Payments to ex-spouse under divorce agreement held deductible

Article Abstract:

The US Court of Appeals for the Fourth Circuit ruled in Estate of Waters that the claims made on the decedent's estate pursuant to a a divorce agreement were valid claims deductible for estate tax purposes. The Tax Court had applied IRC section 2043(b)(1), which states that relinquishment of dower or curtesy or of other marital rights to a decedent's estate do not constitute consideration. The Fourth Circuit disagreed, finding that the payment made pursuant to the settlement was clearly a deductible claim on the estate.

United States, Laws, regulations and rules, Estate tax, Estate taxes, Claims against decedents' estates, Divorce settlements

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Residence was included in estate despite transfer to son

Article Abstract:

The Tax Court in Estate of Maxwell included in a decedent's gross estate a personal residence which she had transferred to her son but still lived in until she died. The decedent was her son's tenant and paid rent to him, but the court still held under Section 2036(a) that the transfer was not 'a bona fide sale.' Inclusion in the estate under Section 2036(a) was triggered by the implied understanding that the decedent would continue to enjoy the property after the transfer.

Cases, Housing, Dwellings, Decedents' estates, Transfer (Law)

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