Discussion:Marital Deduction - Right to Use Home
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Discussion Forum Index --> Advanced Tax Questions --> Marital Deduction - Right to Use Home
Discussion Forum Index --> Tax Questions --> Marital Deduction - Right to Use Home
| 3 February 2008 | |
| Husband leaves family residence in trust. Wife has the right to occupy the house for life. Upon termination of her occupancy, she can sell the home at fmv and receive the 50% of the proceeds from the sale, with the remainder going to her stepson.
I believe that this is not a life estate with general power of appointment since she is not able to appoint the property to herself. Nor can she gift the property. In addition, she does not have a life income interest. I also believe that this is not a QTIP interest since she cannot rent the property, and consequently, would not have a qualifying income interest for life. Therefore, I see no marital deduction for the value of the home. Any other opinions? | |
RoyDaleOne (talk|edits) said: | 3 February 2008 |
| Finally, in IRS Letter Ruling (TAM) 9040001,(114) the IRS concluded that 50% of a personal residence's value qualified for QTIP status when the decedent's will gave his spouse a bare right of occupancy, but provided that if she vacated the residence, the property would be sold and 50% of the proceeds would be distributable to the surviving spouse. | |
| 3 February 2008 | |
| RoyDaleOne, you are awesome! I ran this issue by attorneys who are certified specialists in estate planning and they were unable to find a way to make this work. | |
| 3 February 2008 | |
| Not really. The basic principal is that the marital deduction is available for a devise that meets at least the legal equivalent of a life estate (in the instant case it exceeds). The determination is always under applicable state law. My recollection is that there was an Eleventh Circuit ruling that held mere right of occupancy qualified. | |
| 4 February 2008 | |
| Yes, the Eleventh Circuit’s Peacock decision would certainly work if my client were domiciled in Alabama. However, this particular decedent was domiciled in Missouri, and the Service will not follow Peacock in MO.
Thanks to all who responded. | |
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