Disclaimers were invalid when legatees were paid later.At Louise Louise (ləwēz`), 1776–1810, queen of Prussia, consort of Frederick William III; a princess of Mecklenburg-Strelitz. During the Napoleonic Wars her patriotism and bravery won her lasting popularity. Monroe Monroe. 1 Industrial city (1990 pop. 54,909), seat of Ouachita parish, SE La., on the Ouachita River; founded c.1785, inc. as a city 1900. The center of the great Monroe Natural Gas Field (discovered 1915), it has important chemical plants, as well as pulp, paper, and lumber mills. Automotive parts are also manufactured. The first settlers founded (c.1785) Fort Miró.'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 Bequest The process of giving stocks, bonds, or any other assets to beneficiaries through the provisions of a will.Notes: Bequests can be made to family, friends, institutions, or charities. See also: Asset, Beneficiary, Escheat, Estate Planning, Heir, Inheritance, Will to 31 individuals. The estate's accounting firm recommended 29 of these people disclaim their gifts to increase the estate's marital deduction Marital Deduction A tax reduction that is mainly used for the purposes of estate and gifts. It allows an individual to transfer some assets to his or her spouse tax free, creating a deduction in taxable income.Notes: The IRS has strict guidelines for allowable deductions, so it is important to make sure you or your accountant adheres to them when making deductions., thereby reducing the estate tax. Internal Revenue Code section 2056(a) allows an unlimited estate tax marital deduction for property interests passing from a decedent to the surviving spouse. Under the regulations, if a qualified disclaimer disclaimer n. 1) denial or renunciation renunciation n. 1) giving up a right, such as a right of inheritance, a gift under a will, or abandoning the right to collect a debt on a note. 2) in criminal law, abandoning participation in a crime before it takes place, or an attempt to stop other participants from going ahead with the crime. A defendant may use renunciation as evidence of his/her innocence. Once the crime is underway, any claimed renunciation is factually too late. by someone of his/her title to property. 2) denial of responsibility for another's claim, such as an insurance company's refusal to admit coverage under an insurance policy. 3) statement of non-responsibility, as is made when dissolving a partnership or business. 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 section 2518, which requires, among other things, an irrevocable and unqualified refusal by the donee donee n. a person or entity receiving an outright gift or donation.. 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 legatee n. a person or organization receiving a gift of an object or money under the terms of the will of a person who has died. Although technically a legatee does not receive real property (a divisee), "legatee" is often used to designate a person who takes anything pursuant (according) to the terms of a will. 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 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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