On July 10, the Internal Revenue Service (IRS) issued a private letter ruling involving a surviving spouse who wanted to treat a marital trust he inherited as a qualified terminable interest property (QTIP) trust. The trustee of the marital trust proposed splitting the trust into two shares with one being non-exempt from the GST tax. The letter ruling held that the non-exempt share was to be treated as a QTIP, and that the subsequent disclaimer of the surviving spouse’s interest in the first trust would have any effect on elections for a federal estate tax marital deduction. The IRS also held that the transfer of a qualifying income interest would be subjected to gift taxes. Finally the IRS ruled that the income interest would not be valued at zero and the estate would not include a renounced property interest.
See Jillian Merns, IRS Rules on Results of Surviving Spouse’s Unqualified Disclaimer, Wealth Management, July 17, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
