All the following transfers qualify for a marital deduction EXCEPT: A. The grant
ID: 2718464 • Letter: A
Question
All the following transfers qualify for a marital deduction EXCEPT:
A. The grantor of an inter vivos irrevocable trust specified that her husband was to receive a life income from the trust assets, and the remainder would go to her children.
B. At the time of creation of a charitable remainder trust, the grantor gave a life interest in the trust assets to his wife.
C. The decedent provided in his Will for his wife to receive a life income from his estate assets, and his wife was given a general power of appointment over the property.
D. The decedent’s Will provided that if his wife died within six months of his death, the residuary would pass to his children, and not to her or to her estate.
Explanation / Answer
The decedent’s Will provided that if his wife died within six months of his death, the residuary would pass to his children, and not to her or to her estate. (which is Option D)
________
Explanation:
Option D indicates a situation of terminal interest. In case of terminal interest, the interest in the property so transferred will get terminated on the occurence of a particular event or after a particular period of time. In the given case, the transfer of interest in the estate is contingent upon the happening of a particular event (survival for a period of 6 months). In such a case, marital deduction will not be allowed, as the spouse will not be treated as a "Surviving" spouse at the time of grant, as it is possible that the children may enjoy the property/estate after the termination of wife's interest upon her death within the period of 6 months. However, if the wife survives the 6 month period, the interest will be treated as eligible for marital deduction.