Disclaimers were invalid when legatees were paid later.At Louise Monroe's death in 1989, the value of her one-half interest in the Monroes' community-property estate was $9.7 million. Louise was survived by her husband, Edgar. Louise's will made specific bequests specific bequest n. the gift in a will of a certain article to a certain person or persons. Example: "I give my diamond engagement ring to my niece, Sophie." (See: will, bequest) to 31 individuals. The estate's accounting firm recommended 29 of these people disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. their gifts to increase the estate's marital deduction marital deduction n. when one spouse dies, the survivor may take a tax deduction of half of the value of the estate of the dying spouse. Thus, the minimum value of the estate before there is a possible federal estate tax rises from $600,000 to $1,200,000 at the death , thereby reducing the estate tax. Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. section 2056(a) allows an unlimited estate tax marital deduction for property interests passing from a decedent An individual who has died. The term literally means "one who is dying," but it is commonly used in the law to denote one who has died, particularly someone who has recently passed away. to the surviving spouse. Under the regulations, if a qualified disclaimer results in the surviving spouse becoming entitled to the disclaimed property, the property is treated as passing from the decedent to the surviving spouse for purposes of the marital deduction. A qualified disclaimer is defined in IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. section 2518, which requires, among other things, an irrevocable and unqualified refusal by the donee The recipient of a gift. An individual to whom a power of appointment is conveyed. donee n. a person or entity receiving an outright gift or donation. DONEE. . It also requires that the person making the disclaimer not accept the interest or any of its benefits. Treasury regulations section 25.2518-2(d)(1) says "accepting the interest" includes accepting any consideration in return for making the disclaimer. The 29 legatees were asked to disclaim their gifts, and each agreed to do so; all signed valid disclaimer documents in December 1989. Some legatees testified they were afraid to go against Edgar Monroe's wishes; others testified they knew Monroe would take care of them. The total amount disclaimed was about $900,000, which was included in the estate tax marital deduction on Louise Monroe's estate tax return. In January or February of 1990, Edgar Monroe gave each of the 29 legatees gift checks in about the same amounts as the bequests they had renounced. The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. claimed the disclaimers were not valid and reduced the marital deduction by the amount of the 29 disclaimers, resulting in an estate tax deficiency. The IRS argued the disclaimers were not "irrevocable and unqualified" because the legatees accepted the cheeks given to them later. Result: For the IRS. The disclaimers were not valid. The legatees did not make irrevocable and unqualified disclaimers. Although the legatees did not ask for consideration in exchange for their renunciations, each was induced to execute the disclaimer; they felt they should do what Edgar Monroe wanted them to do. Thus, their disclaimers were not unqualified. Further, the evidence indicated Edgar Monroe's checks were not pure gifts but were infact made in exchange for the disclaimers. * Monroe Est., 104 TC No. 16. |
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