Estate tax on life insurance trust was not reduced by unified credit, rules CA-6

Article Abstract:

The authors discuss the U.S. 6th Circuit Court of Appeals 1999 case Salyer where a significant estate tax liability resulted from a planning error where the decedent had retained incidents of ownership in a life insurance policy which was payable to his estate. The court's highly technical analysis included a finding that the decedent's intent was not primarily focused on reducing the estate tax.

Cases, Intent (Law)

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Life insurance was not included in insured's estate

Article Abstract:

TAM 9651004 represents a pro-taxpayer decision, finding that plaintiffs overcame the strong presumption in favor of the policy facts regarding ownership of two life-insurance policies. The decedent's corporation validly transferred the policies to him in 1987, and on the same day he validly transferred them to a trust, though the insurer did not change its records to reflect the new ownership until 1991; decedent died in 1992. Had a strong documentary trail not been present, the result would probably have differed.

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SEC restrictions on stock at decedent's death were considered in valuing the stock

Article Abstract:

The US 9th Circuit Court of Appeals in Estate of McClatchy applied the general rule of valuation for estate tax purposes by holding that values are determined at the date of death. The court reversed the Tax Court which did not allow consideration of SEC stock restrictions, which had substantially reduced the stock's value, but which were lifted after the decedent's death. The precedential value of the opinion is not established, but it provides valuable guidance in this area.

Influence, Securities, Industry regulations, Government regulation of business, Trade regulation

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