Taxpayer was entitled to rely on actuarial tables despite terminal illness

Article Abstract:

The IRS revised its requirements for formulating tax minimization options for the terminally ill in light of the tax annuity dispute in Estate of McLendon, but the agency did not wholly resolve the timing issue. The revised rule states the IRS will presume people are not terminally ill if survival from an illness or condition is better than 50% and will presume no terminal illness existed for people living at least eighteen months before dying from the illness or condition. The six month disparity between assumptions seems to encourage future challenges.

Taxation, Insurance, Terminally ill persons, Terminally ill, Statistics, Annuities

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Marital deduction disallowed due to condition subsequent

Article Abstract:

The 1996 Dowell case ruling illustrates how poor estate planning can lead to the disallowance of the marital deduction due to a condition subsequent. The decedent's insurance agency stock was to pass to a daughter, but the bequest failed because the heir failed to make specified payments to the decedent's spouse, whom the court determined to be the actual recipient of the stock. A disclaimer or other estate planning technique might have been a more appropriate arrangement, given the inability of the heir to make the payments required.

Estate Planning, Decedents

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Reformed trust didn't qualify for marital deduction

Article Abstract:

In Estate of Rapp the 9th Circuit Court of Appeals rejected a California probate court's estate reformation, fueling debate regarding federal courts encroaching on state probate courts' jurisdiction. Still, all parties agreed the state court should not have reformed the instrument. Without the federal court's rejection of the reformation, however, the estate would need to worry about conflicting state and federal tax treatments.

Interpretation and construction, California, Probate law, Community property

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