Case Summaries

(decedent allegedly owed debt to predeceased husband based on agreement that couple would keep their estates balanced; decedent's estate claimed deduction for such debt; court upheld IRS denial of deduction due to lack of evidence supporting debt; agreement was merely "friendly agreement between spouses" based on desire to minimize estate tax; agreement not entered into as result of business relationship; fact that debt recorded on both decedent's and spouse's estates' returns relatively minor fact compared to other evidence). 


(estate not entitled to refund of penalty where heirs needed additional time to determine extent of decedent's business affairs involving complex entities in multiple states but, in reliance on advice of estate's attorney, failed to file for extension of time to pay estate taxes).


(decedent, real estate tycoon, died with pourover will that put assets not necessary for payment of debts and taxes into trust created by pre-deceased spouse for benefit of grandchildren; estate made bequest of $100,000 to named beneficiary that assisted trustee; named beneficiary produces second will leaving him one-half of decedent's assets with other half passing to incarcerated grandson; in battle of wills, trustee wins at trial court, but state (CA) Supreme Court reverses and remands on undue influence and elder abuse claims; trustee pays beneficiary $300,000 in settlement with additional $275,000 to be paid if beneficiary agrees not to sue trustee and her brother; trustee claims deduction for amount paid; court upheld IRS denial of deduction on basis that beneficiary had legitimate claim against estate as beneficiary of estate rather than as a creditor; payment made in satisfaction of claim of beneficiary's interest in estate and is non-deductible).  


(wife who had started divorce proceedings against decedent prior to his death tried to renounce will in which she was given the dogs and some money to transport them to her home out of state; her motion to renounce the will was denied and she appealed; she argued under state law she was not required to affirmatively renounce the will when not provided for in a will; court held that bequest of dogs made her a beneficiary and she was required to affirmatively renounce within the statutory period; court held she missed the deadline; denial affirmed).


(brothers had amicable farming partnership for decades; partnership agreement entered into in 1973 required bi-annual assessment of partnership valuation and life insurance policies on each partner to buy out the deceased brother’s family; formalities of 1973 agreement or partnership not followed by either brother; additional life insurance policies purchased during partnership’s lifetime; partnership had significant debts for many years and partnership cashed out value of life insurance proceeds unrelated to 1973 agreement before brother’s death; after brother died, estate brought suit against surviving partner for conversion of value of life insurance proceeds; after bench trial probate court held partnership agreement not followed by either brother and cashed out life insurance policy not related to agreement, so no conversion of value and estate not entitled to any recovery from surviving partner; court also denied attorney fees to surviving partner; estate appealed; appellate court affirmed findings on partnership agreement, life insurance value, and denial of attorney fees). 


(court considers defendant’s motion to dismiss for abstention under doctrine established in Colorado River Water Conservation Dist. v. U.S., 424 U.S. 800 (1976); pending state court action regarding the administration of a family farm trust and allegations of a breach of fiduciary duty and legal effect of daughter’s changes to distributions in trust document while the benefactor was incapacitated; allegations also regarding propriety of distribution of federal estate taxes among beneficiaries; court held factors were in favor of abstention, but stayed proceedings rather than dismissed suit).


(case consolidated two estates with the same issue; husbands died leaving QTIP trusts to their wives to be taxed in the wives’ estates for federal tax purposes through tax deferral and marital deductions; no elections were made to trusts for state marital deduction or tax deferral; no such election or deduction existed under state law at the time of the husbands' deaths; federal law also changed during period between husbands’ deaths and wives’ deaths; wives’ estates received deficiency notices from the state regarding the assets remaining in the QTIP trust and wives appealed; court held estates not liable for state taxes on QTIP trust created pre-2005; QTIP is transferred by electing spouse and not surviving spouse, so state overstepped its bounds in interpreting statute by trying to tax wives’ estates by classifying QTIP trust as a “real” transfer (as required under statute) rather than a legally “fictional” transfer; in 2005 state (WA) adopted state estate tax applicable to all tangible property in WA in addition to intangible property irrespective of location; tax also applicable to property contained in QTIP trusts; in 2005 legislation, state did not distinguish between trusts established before or after effective date of legislation; consequently, state had no authority to tax property held in QTIP trust created before effective date of law). 


(trust at issue contains commingled assets of members of branch of Mormon Church that have remained faithful to Mormon tenet of polygamy and tenet of commingling of assets; lower court ruling returning control of trust property worth $114 million to members reversed; trust to remain in state control because plaintiff's claim time-barred; companion federal case on constitutional taking issue still proceeding - see 773 F.Supp. 2d 1217). 


(husband and wife were separated at time of husband’s untimely death as result of work-place accident; decedent's mother, as administrator of husband’s estate, claimed wife was not entitled to receive any interest in husband’s estate based on state statute that spouse who voluntarily leaves the other and "lives in adultery" forfeits any interest in deceased spouse’s estate; mother presented evidence that wife had drunken sex with another man the night before husband died; court held that legislature  intended phrase “living in adultery” to mean more than a single act of intercourse outside the marriage and required periodic and recurring conduct; also fornication committed by surviving spouse after decedent's death irrelevant under adultery statute because once spouse died, surviving spouse could not commit adultery against the deceased spouse). 


(appellate court upheld summary judgment in which sisters unable to establish undue influence claim in mother’s transfer of farmland to brothers following death of father; court held significant that mother made fair deal with brothers, mother got out from financing and was able to generate income upon which she could live and hire caregiver to allow her to stay in her home; undisputed evidence showed mother was competent and capable of making decisions; and sisters could not meet heightened standard of proof of undue influence under state statute for estate disputes).


(appeal from trial court’s denial of rescission of trust; allegations by plaintiff that wife used husband’s assets to fund her own trust in conflict with prenuptial agreement; on appeal, court held prenuptial allowed parties to give or receive property from each other during the marriage; fiduciary relationship not created by marital relationship alone, so no breach; court denied conversion claims due to lack of evidence that wife wrongfully appropriated property or forged beneficiary form; further, no evidence presented of reversionary interest in deeding of farmland to wife; trial court judgment affirmed).


(taxpayer desired to make contribution of undivided interest in unitrust payment to charity and claim charitable deduction for contribution; taxpayer and spouse created CRUT that provides for annual payment to the couple; upon death of first of couple to die, surviving spouse entitled to entire payment; neither spouse has retained right to revoke their respective survivorship interest transferred at time of trust creation; upon death of last of spouses to die, trustee to distribute all principal and income of trust (remainder) to charity; IRS determined that charitable deduction would be allowed and that donor would be entitled to gift tax charitable deduction). 


(Chapter 7 case in which debtor seeks to hold bank (serving as trustee of family trust of which debtor is a beneficiary) in contempt for alleged violation of discharge injunction by offsetting 2010 trust distribution to debtor in order to satisfy debtor's obligation to trust for interest on a Nov. 7, 1985 note that debtor had failed to make payments on which hampered trustee's ability to make distributions to other beneficiaries; court holds that discharge injunction applies to note, but that the Doctrine of Recoupment applies to except note from discharge; offset authorized under trust law and state (KS) law; debtor's motion for summary judgment for contempt denied; summary judgment granted for other trust beneficiaries).


(Chapter 7 case in which debtor seeks to hold bank (serving as trustee of family trust of which debtor is a beneficiary) in contempt for alleged violation of discharge injunction by offsetting 2010 trust distribution to debtor in order to satisfy debtor's obligation to trust for interest on a Nov. 7, 1985 note that debtor had failed to make payments on which hampered trustee's ability to make distributions to other beneficiaries; court holds that discharge injunction applies to note, but that the Doctrine of Recoupment applies to except note from discharge; offset authorized under trust law and state (KS) law; debtor's motion for summary judgment for contempt denied; summary judgment granted for other trust beneficiaries).


(married couple named son as agent under power-of-attorney (POA); upon married couple beginning to suffer from dementia, daughter moved in with them to care for them via written agreement; wife entered nursing home while husband remained in marital home and was cared for by daughter; wife's interest in home transferred to husband by son via power granted to him in POA; son later used POA to transfer husband's interest in home to daughter caregiver; husband entered nursing home and daughter sold home with proceeds of sale split between daughter and brother (POA agent); husband's application for Medicaid denied on basis that sale proceeds available to husband for purposes of Medicaid eligibility; court determined that exemption available to child caregiver applicable; exception contained in 42 U.S.C. Sec. 1396p(c)(2)(A)(iv) allows children providing in-home care to disabled parents over long term can receive family home without impacting parent's Medicaid eligibility). 


(before death, decedent created revocable trust and funded it with his property; decedent later entered nursing home and received Medicaid until death; no estate administration due to insolvency of estate; state later sought to appoint administrator on basis that state entitled to reimbursement from trust assets for Medicaid benefits paid to decedent; state did not receive notice of decedent's death and, as such, one-year statute of limitations inapplicable; state law also says probate estates cannot be closed unless release filed showing that Medicaid benefits received during life have been paid; property contained in revocable trust does not shelter assets from claim of state for Medicaid recovery). 


(additional estate tax under I.R.C. Sec. 2057(f)(2) cannot be extended by agreement; under Sec. 2057(i)(3)(k), additional three-year period for assessment provided in I.R.C. Sec. 2032A(f) applies to additional estate tax under I.R.C. Sec. 2057(f)(2) and nothing in I.R.C. Sec. 2032A(f) says that the period can be extended by agreement). 


(estate executor granted 120-day extension to file Form 8939 to make I.R.C. Sec. 1022 election to allocate income tax basis increase with respect to property acquired from decedent). 


(case involves IRS attempt to issue penalties with respect off-shore irrevocable, asset-protection trust that plaintiff established in West Indies; plaintiff reported trust to IRS on Form 3520-A, but did not file Form 3520 which potentially subjected plaintiff to penalty under I.R.C. Sec. 6677(a) of greater of $10,000 or 35% of gross reportable amount (which would exceed $578,000); exception for penalty exists if failure to file due to reasonable cause and not due to willful neglect; plaintiff claimed reasonable reliance on accountant and that plaintiff lacked personal knowledge of Form 3520 filing requirements; IRS moved for summary judgment that exception to penalty did not apply; court denied motion on basis that plaintiff provided accountant with all applicable trust documents, relied on accountant to advise him on trust filings, accountant did advise plaintiff on some tax matters relating to trust, accountant prepared plaintiff's personal returns and plaintiff believed all returns had been filed; no mention of whether plaintiff failed to report trust income). 


(interest attributable to unpaid gift tax runs from due date of gift tax return; result same even if unified estate and gift tax credit would have fully offset the gift tax had gift been reported on Form 709; under facts at issue, unified credit fully utilized on subsequent gift that was reported and could not be applied against earlier gift). 


(husband and wife owned home together that wife had owned individually before the marriage; after the marriage, wife quitclaim deeded home to herself and her husband; wife then entered nursing home and husband transferred home into his sole name; wife received Medicaid benefits; husband died and home was sold; state filed claim in husband's estate seeking recovery of Medicaid benefits that had been paid to wife up to that point in time in accordance with wife's ownership interest; court determined that federal law does not bar state from recovering assets from estate's of either spouse in such situations, including community property (Note:  ID is a community property state)). 


(Hawaii's definition of "marriage" contained in state constitution as limited to one man and one woman does not violate U.S. Constitution; court noted that judicial restraint is necessary with respect to redefining marriage by stating, "if the traditional institution of marriage is to be restructured, it should be done by a democratically-elected legislature or the people through a constitutional amendment, not through judicial legislation that would inappropriately preempt democratic deliberation regarding whether or not to authorize same-sex marriage).


(estate executor granted 120-day extension to file Form 8939 to make I.R.C. Sec. 1022 election to allocate income tax basis increase with respect to property acquired from decedent). 


(estate executor granted 120-day extension to file Form 8939 to make I.R.C. Sec. 1022 election to allocate income tax basis increase with respect to property acquired from decedent). 


(IRS reiterates its judicially-rejected position that a trust cannot meet the tests of I.R.C. Sec. 469(c)(7)(B) because those tests only apply to individuals that can render "personal services"; Chief Counsel notes that pending case on the matter is before the Tax Court - Aragona Trust).


(MN law requiring estate property to be valued for purposes of MN estate tax in accordance with I.R.C. is constitutional; because estate not eligible to elect alternate valuation date for federal estate tax purposes it could not make such election for state estate tax purposes). 


(contentious four-year family squabble over estate; trial court resolved issues and held hearing on attorney’s fee award; trial court granted fees without specifying reason for fees or that work benefitted estate; beneficiaries appealed; appellate court rejected argument that fees awarded were less than amount saved by estate ($9,024.75 for $9,080 savings); appellate court unable to determine any basis in record for granting award, so court unable to review; trial court’s order vacated and case remanded to trial court for new determination of attorney’s fees).


(son offered to purchase one specific trust property from his parents for agreed upon price as stated within one of the trusts and retention of life estates for parents and a sibling; deed prepared by son included purchase of all trust property for purchase price and severely limited life estates; parents signed deed without recognizing they were selling all of their properties; son began to treat parents poorly and invoked severe restrictions on their use of the property; parents filed suit for rescission of deed and constructive fraud and for damages caused to tractor by son; son brought counter-claim seeking forfeiture of life estate by sibling for failure to pay property taxes or insurance, conditions contained within deed but not conveyed to sibling; after hearing, trial court ordered rescission of deed based on breach of trust; appellate court reversed because trust stated son could purchase one of the properties for the agreed upon price so there was no breach of trust and remanded for entry in favor of son on deed; on remand, court held no constructive fraud occurred, no damages for tractor because it was in parents’ possession and no credible evidence of damages presented, and ordered damages to be paid to son by sibling for taxes and insurance, but would not forfeit life estate; parents appealed and son cross-appealed; appellate court held law of case was that no constructive fraud occurred so no review of that claim; court upheld denial of damages for tractor; court determined forfeiture would not be equitable especially considering the lack of notice of conditions and the fact damages had already been awarded).


(effective for deaths after Jun. 30, 2012, provision exempts working farms and related agricultural commodities from state inheritance tax; to be exempt, inherited farmland must be transferred to family members and continue in farm use for seven years after decedent's death and land must produce annual gross income of at least $2,000; annual certification required).


(phases out state inheritance tax beginning in 2013 by phasing-up credit against inheritance tax liability; credit is 10 percent for deaths in 2013, and increases and additional ten percentage points per year through 2021; tax eliminated for deaths beginning in 2022; replacement amounts payable to counties phased out over 10 years beginning with amounts payable beginning July 1, 2012; exemption for Class A transferees increased from $100,000 to $250,000 for deaths after 2011, and reclassifies spouse, widow or widower of child of transferor as Class A rather than Class B; spouse, widow or widower of step-child of transferor reclassified as Class A transferee rather than Class C transferee).


(enactment of decanting statute which allows a trustee to exercise discretionary distribution power by appointing trust principal or income to the trustee of a second trust that may have different terms; beneficiaries of second trust must include only beneficiaries of original trust; when trustee's power to distribute income and principal is subject to ascertainable standard, distributions from second trust must be limited by same ascertainable standard and such distribution power must be exercisable in favor of same current beneficiaries, unless court approves otherwise, with exception made for distributions to special needs trust). 


(Act adds IC 6-4.1-1-3.5 to the Code too bar estate recovery upon surviving spouse's death for recovery of Medicaid benefits that had been paid to pre-deceased spouse; Act is part of revised probate provisions). 


(estate administrator filed income tax return reporting tax liability of $491,521 on basis that decedent owned fee simple interest in farm; before return filed, decedent’s father sued estate seeking deed reformation on basis that deed contained scrivener’s error omitting intended reservation of life estate for father; court reformed deed to reserve life estate for father; estate appealed and filed administrative claim for refund of overpaid taxes in amount of $215,323 on basis that value of decedent’s interest in farm overstated due to mistaken belief that decedent owned farm in fee simple; IRS disallowed claim on basis that it was untimely as it was not filed within three years of filing the return or two years from payment of tax; trial court granted government’s motion to dismiss; appellate court affirmed on basis that courts have no ability to equitably toll statutory time limits; court rejected argument that I.R.C. Sec. 6511 three-year time limit started when MS Supreme Court denied certiorari; no violation of due process; estate administrator should have filed protective claim to preserve estate’s interest in refund).


(case involves family holding corporation in which decedent's wife owned 140 Class A preferred shares with par value of $1,000 each; decedent's wife executed will in 1991 but no one informed about it and will stored in lawyer's vault and not retrieved until 2010; decedent's wife died in 1997 as Florida resident; decedent died in 2004 and Form 706 prepared for estate which included decedent's 600 shares and wife's 140 shares in decedent's estate on belief that shares of wife had passed to decedent at wife's death (even though record title to the shares remained in wife's name at date of decedent's death); 740 shares valued at $740,000; IRS valued shares at $142,203,000 (due to the preferred shares constituting over one-third of voting shares in corporation which was enough to block any major change from occurring to the corporation) and filed notice of deficiency for $68,141,250 plus penalties of $27,160,896; wife's will discovered in 2010 which stated that wife owned the 140 shares and directed such shares to be sold or redeemed on her death; petition filed to remove 140 shares from decedent's estate and stock value in total was $600,000; IRS argued statute of limitations and statute of non-claim barred removal, but court disagreed insomuch as no claim against decedent's estate arose by wife's estate during decedent's lifetime; shares not included in decedent's estate because decedent did not exercise dominion and control over shares; decedent's estate not bound by position taken on estate's Form 706).


(decedent executed a will; thirty-six hours before his death, he executed a codicil to will that provided bequest of land to cousin’s son with an estimation of acreage and specific location on property, but specifically reserved 45 acres and the home to decedent’s daughter; survey done showed description of property to be conveyed to cousin’s son would leave only 20 acres to daughter; petition was made to court to interpret codicil; trial court found codicil patently ambiguous except for intent that daughter receive 45 acres and home and using extrinsic evidence would require judicial rewriting of codicil, so codicil thrown out and all property given to daughter; cousin’s son appealed; appellate court determined ambiguity was latent because it arose from estimation of acreage and subsequent survey of property that could be remedied and trial court erred by dismissing entire codicil; appellate court overturned trial court opinion and remanded with instructions for surveyor to survey specific acres from boundaries on two tracts mentioned in codicil to distribute specific property decedent intended each party receive from Estate).


(decedent died in 2010, his wife survived him and was appointed administrator of his estate; a few months later his wife resigned her position due to health issues; the following month, decedent’s original signed will executed in 1980 was mailed anonymously to the trial court; co-executors of decedent’s will petitioned to admit decedent’s will to probate; administrator of estate objected claiming decedent had burned a duplicate original of his will executed in 1980, so he had revoked current copy of will; decedent’s wife died shortly after the petition to admit will was filed; trial court held circumstantial evidence established will burned in front of witness was duplicate original consistent with decedent’s statements that his wife should sell farm and decedent would no longer support his brother after decedent’s death; court held duplicate copy of will was out of decedent’s control, so it was effectively revoked by the burning of the copy in decedent’s control; appellate court disagreed that evidence established duplicate wills were established or that will burned was copy of same will currently in trial court’s possession; court further held that mere revocatory intent is insufficient if no clear evidence of specific acts taken to revoke will exist; appellate court found no clear evidence of duplicate original, so no evidence current will was revoked by burning of a will in front of witness; further, administrator had burden of establishing duplicate will was not in decedent’s possession; administrator was unable to establish evidence of this requirement because will sent to court was from unknown source; will met all statutory requirements for validity, so because administrator’s burden unmet, will should have been admitted; trial court’s opinion reversed and case remanded).


(120-day extension of time granted to make I.R.C. Sec. 1022 election on Form 8939 and allocate additional basis to eligible property with respect to estate of decedent dying in 2010).


(decedent and wife established family limited partnership (FLP) to invest in land and stocks; trust language stated that "partnership profits are allocated to the partners according to their proportional partnership interests. All distributions of net cash flow are also shared among the partners in proportion to their partnership interests. Distributions must be made in cash pro rata. The partnership agreement, as amended, provides that the primary source for distributions is distributable cash derived from partnership income"; trust established for grandchildren limited partner of FLP and set-up as Crummey Trust that received dividends; decedent and wife were limited partners and they made gifts of partial limited partner interests on annual basis consistent with present interest gift tax exclusion which were significantly restricted; transfer of limited partner interests required prior written consent of general partners and 70 percent interest of limited partners; if transfer approved, transferee would not become substitute limited partner unless transferring limited partner gave transferee such right and transferee (1) accepted and assumed terms and provisions of partnership agreement; (2) provided (for an assignee that is trustee) complete copy of trust instrument authorizing trustee to act as partner in partnership; (3) executes whatever other documents the general partners require, and (4) is accepted as substitute limited partner by unanimous written consent of general partners and limited partners; each limited received net cash distributions annually consistent with ownership interest; IRS claimed that gifts of limited partner interests were not present interests and, as such, not excluded from decedent's gross estate; court determines that while donees of limited partner interests did not receive unrestricted right to interests, they did receive the right to the income attributable to those interests; court noted that estate had burden of establishing that FLP would generate income and that some portion of that income would flow to the donees on a consistent basis and that the portion could be ascertained; FLP held dividend-producing, publicly traded stock; thus, court determined that income from stock flowed steadily and was ascertainable; accordingly, the limited partners received present interests; gifted amounts excluded from decedent's estate).


(extension of time to make alternate valuation election granted).


(scrivenor error in naming of Trust 2, instead of Trust 1, as the grantee of deed did not result in a completed gift by the grantor; grantor could correct mistake via civil action seeking deed reformation based on mutual mistake; matter involved attempted funding of trusts for spouses that were to qualify as QPRTs; husband intended to transfer his interest in residence to his trust and wife intended to do the same, but wrong trust named; original deed determined not to reflect parties true intent; upon reformation, there would be no completed gift to wrong trust).


(son of decedent established that tractor gifted to him by decedent before death; district court entered permanent injunction enjoining estate from selling tractor because it was gifted to son; estate appealed; appellate court agreed son established proof tractor had been gifted to him prior to decedent’s death and upheld permanent injunction)


(case involves action by government to collect unpaid estate tax from heirs of decedent; estate made I.R.C. §6166 election to pay estate tax in installments, but defaulted after having paid only $5 million of $6.871 million estate tax liability; IRS sought to collect unpaid amount from personal representative of estate and beneficiaries of decedent’s trust who were residual beneficiaries after all expenses and taxes of trust had been paid; major asset of trust was corporate stock; decedent died in 1991, trust assets distributed in 1992, and corporation filed bankruptcy in 2002 with beneficiaries receiving nothing on shares except minor amounts in return for covenant not to compete from the buyer of the corporate assets from the bankruptcy estate; beneficiaries, as recipients of trust distributions not liable as beneficiaries or transferees, but recipients of life insurance liable along with others who were liable as personal representatives; I.R.C. §6234(a)(2) lists categories of persons personally liable for estate tax including “transferee,” “trustee” and “beneficiary”; heirs did not become “distributee” when trust corpus distributed to them because property not received immediately upon date of death of decedent - trust property passes immediately to trustee; term “beneficiary” only refers to recipient of life insurance policy and not to be applied broadly to apply to any recipient of property from estate or trust; IRS not time-barred from collecting against distributes as long as time-period open for collecting against estate – statute of limitations had been extended by I.R.C. §6166 election; under 31 U.S.C. §6166, personal representative that pays any part of estate debt (i.e., distributing assets) before paying governmental claim personally liable to extent of payment for unpaid governmental unpaid claims; personal representative had distributed assets to beneficiaries before estate tax fully paid and become personally liable for any unpaid tax; contribution agreement between personal representative and beneficiaries also made personal representative personally liable if beneficiaries defaulted on obligation to pay unpaid estate tax).


(defendant's posthumously conceived twins, born 18 months after husband's death, not "children" under Social Security Act as the biological offspring of deceased wage earner; under state (FL) law, marriage ends on death of spouse, so conception after spouse's death means that twins do not qualify as "marital children"; Social Security Administration's interpretation of Social Security Act that qualification for benefits turns on whether children could inherit from their father under state intestacy law was proper reading of SSA's text and is entitled to deference).


(pro se appeal from former trustee who was removed upon petition by guardian ad litem of minor beneficiary; former trustee was removed for failing to manage trust assets in professional manner; trust properties were uninsured, property taxes were unpaid, unsavory tenants resided in motor homes on trust property without regard to legality of such rentals, and trustee filed pro se answer to wrongful death suit against trust based on accident occurring on uninsured trust property; appellate court affirmed removal).


(donees were recipients of QTIP property as a result of remainder interest created under terms of decedent's will that paid gift tax on such gifts within three years of decedent's death; gift tax amount included in decedent's gross estate in accordance with I.R.C. Sec. 2035(b)(estate tax three-year "gross-up" rule); while I.R.C. Sec. 2519 imposes gift tax when all or portion of QTIP trust is distributed during beneficiary spouse's lifetime to beneficiaries other than the spouse, spouse can recover taxes from beneficiaries from the donees; gift taxes paid under I.R.C. Sec. 2519 subject to gross-up rule and is consistent with policy of I.R.C. Sec. 2035(b) to prevent death bed transfers that would incur gift tax (gift tax is exclusive and estate tax is inclusive); I.R.C. Sec. 2207A does not shift gift tax liability to QTIP recipients).


(trusts and wills must indicate source of income from any amount taxpayer will use for charitable purpose, and source must have independent effect (i.e., income tax cannot be sole purpose for charitable contribution); if independent economic effect lacking, "income distributed for purpose specified in Section 642(c) will consist of the same proportion of each class of the items of income as the total of each class bears to total of all classes"; purpose of provision is to regulate charitable lead trusts).


(decedent's will gave executor (friend of decedent) option to buy decedent's farmland for $3,000/acre if notice to exercise option given within 30 days of appointment as executor and option exercised within 45 days after notice given; option to lapse if not timely exercised; specification given as to how option to be exercised; notice given and option exercised four days after will admitted to probate and executor appointed;  granddaughter opposed executor's intent to proceed with administration of estate on basis that executor failed to comply with option period in will which (she claimed) required real estate transaction to be completed within 45 days of notice; court disagreed, noting that will was silent as to time of closing of transaction, but plainly did not require transaction to be completed within 45 days; intent to complete occurred within reasonable time after death (8 months); court affirmed trial court order that estate proceed with administration and complete real estate transaction at issue). 


(decedent formed FLP and moved into assisted living facility simultaneously; two years later, decedent funded partnership with personal assets and trust subsequently dissolved; while decedent sole owner of FLP, two children listed as general partners even though contributing nothing to FLP; FLP loaned funds to decedent's children with such loans documented but with no terms except to establish interest payments; some assets kept out of FLP for decedent's care; upon decedent's death, 40% discount claimed on FLP assets; court held that no discounts allowable because decedent owned 100 percent of FLP interests and FLP agreement said that FLP would dissolve upon one partner acquiring interests of all others; decedent owned all assets individually and assets includible in decedent's estate at full FMV). 


(Medicaid case in which plaintiffs claimed that state Medicaid agency improperly determined that institutionalized spouse ineligible for Medicaid under state law which treated community spouse's annuity income as countable resource; state law not only treated annuity income as available to institutionalized spouse, but also specified that combined income of spouses could not exceed 150 percent of federal monthly allowed limitation; state law more restrictive of federal requirements and invalid as such).


(estate granted extension of time to file Form 8939 to make timely election under I.R.C. Sec. 1022 for decedent that died in 2010; condition for exception to general rule of no extensions of time to be granted satisfied as set forth in Notice 2011-66).


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