QDOT 26 U.S.
Code § 2056 - Bequests, etc., to surviving spouse
(a) Allowance of marital deduction
For
purposes of the tax imposed by section 2001,
the value of the taxable estate shall, except as limited by subsection (b), be
determined by deducting from the value of the gross estate an amount equal to
the value of any interest in property which passes or has passed from the
decedent to his surviving spouse, but only to the extent that such interest is
included in determining the value of the gross estate.
(b) Limitation in the case of life
estate or other terminable interest
(1) General rule
Where, on
the lapse of time, on the occurrence of an event or contingency, or on the
failure of an event or contingency to occur, an interest passing to the
surviving spouse will terminate or fail, no deduction shall be allowed under
this section with respect to such interest—
(A) if an interest in such property passes
or has passed (for less than an adequate and full consideration in money or
money’s worth) from the decedent to any person other than such surviving spouse
(or the estate of such spouse); and
(B) if by reason of such passing such
person (or his heirs or assigns) may possess or enjoy any part of such property
after such termination or failure of the interest so passing to the surviving
spouse;
and no
deduction shall be allowed with respect to such interest (even if such
deduction is not disallowed under subparagraphs (A) and (B))—
(C) if such interest is to be acquired for
the surviving spouse, pursuant to directions of the decedent, by his executor
or by the trustee of a trust.
For
purposes of this paragraph, an interest shall not be considered as an interest
which will terminate or fail merely because it is the ownership of a bond,
note, or similar contractual obligation, the discharge of which would not have
the effect of an annuity for life or for a term.
(2) Interest in unidentified assets
Where the
assets (included in the decedent’s gross estate) out of which, or the proceeds
of which, an interest passing to the surviving spouse may be satisfied include
a particular asset or assets with respect to which no deduction would be
allowed if such asset or assets passed from the decedent to such spouse, then
the value of such interest passing to such spouse shall, for purposes of
subsection (a), be reduced by the aggregate value of such particular assets.
(3) Interest of spouse conditional on
survival for limited period
For
purposes of this subsection, an interest passing to the surviving spouse shall
not be considered as an interest which will terminate or fail on the death of
such spouse if—
(A) such death will cause a termination or
failure of such interest only if it occurs within a period not exceeding 6
months after the decedent’s death, or only if it occurs as a result of a common
disaster resulting in the death of the decedent and the surviving spouse, or
only if it occurs in the case of either such event; and
(B) such termination or failure does not in
fact occur.
(4) Valuation of interest passing to
surviving spouse
In
determining for purposes of subsection (a) the value of any interest in property
passing to the surviving spouse for which a deduction is allowed by this
section—
(A) there shall be taken into account the
effect which the tax imposed by section 2001,
or any estate, succession, legacy, or inheritance tax, has on the net value to
the surviving spouse of such interest; and
(B) where such interest or property is
encumbered in any manner, or where the surviving spouse incurs any obligation
imposed by the decedent with respect to the passing of such interest, such
encumbrance or obligation shall be taken into account in the same manner as if
the amount of a gift to such spouse of such interest were being determined.
(5) Life estate with power of
appointment in surviving spouse
In the case
of an interest in property passing from the decedent, if his surviving spouse
is entitled for life to all the income from the entire interest, or all the
income from a specific portion thereof, payable annually or at more frequent
intervals, with power in the surviving spouse to appoint the entire interest,
or such specific portion (exercisable in favor of such surviving spouse, or of
the estate of such surviving spouse, or in favor of either, whether or not in
each case the power is exercisable in favor of others), and with no power in
any other person to appoint any part of the interest, or such specific portion,
to any person other than the surviving spouse—
(A) the interest or such portion thereof so
passing shall, for purposes of subsection (a), be considered as passing to the
surviving spouse, and
(B) no part of the interest so passing
shall, for purposes of paragraph (1)(A), be considered as passing to any person
other than the surviving spouse.
This
paragraph shall apply only if such power in the surviving spouse to appoint the
entire interest, or such specific portion thereof, whether exercisable by will
or during life, is exercisable by such spouse alone and in all events.
(6) Life insurance or annuity payments
with power of appointment in surviving spouse
In the case
of an interest in property passing from the decedent consisting of proceeds
under a life insurance, endowment, or annuity contract, if under the terms of
the contract such proceeds are payable in installments or are held by the
insurer subject to an agreement to pay interest thereon (whether the proceeds,
on the termination of any interest payments, are payable in a lump sum or in
annual or more frequent installments), and such installment or interest
payments are payable annually or at more frequent intervals, commencing not
later than 13 months after the decedent’s death, and all amounts, or a specific
portion of all such amounts, payable during the life of the surviving spouse
are payable only to such spouse, and such spouse has the power to appoint all
amounts, or such specific portion, payable under such contract (exercisable in
favor of such surviving spouse, or of the estate of such surviving spouse, or
in favor of either, whether or not in each case the power is exercisable in
favor of others), with no power in any other person to appoint such amounts to
any person other than the surviving spouse—
(A) such amounts shall, for purposes of
subsection (a), be considered as passing to the surviving spouse, and
(B) no part of such amounts shall, for
purposes of paragraph (1)(A), be considered as passing to any person other than
the surviving spouse.
This
paragraph shall apply only if, under the terms of the contract, such power in
the surviving spouse to appoint such amounts, whether exercisable by will or
during life, is exercisable by such spouse alone and in all events.
(7) Election with respect to life estate
for surviving spouse
(A) In general
In the case
of qualified terminable interest property—
(i) for purposes of subsection (a), such
property shall be treated as passing to the surviving spouse, and
(ii) for purposes of paragraph (1)(A), no
part of such property shall be treated as passing to any person other than the
surviving spouse.
(B) Qualified terminable interest
property defined
For
purposes of this paragraph—
(i) In general The term “qualified
terminable interest property” means property—
(I) which passes from the decedent,
(II) in which the surviving spouse has a
qualifying income interest for life, and
(III) to which an election under this
paragraph applies.
(ii) Qualifying income interest for life The
surviving spouse has a qualifying income interest for life if—
(I) the surviving spouse is entitled to all
the income from the property, payable annually or at more frequent intervals,
or has a usufruct interest for life in the property, and
(II) no person has a power to appoint any
part of the property to any person other than the surviving spouse.
Subclause
(II) shall not apply to a power exercisable only at or after the death of the
surviving spouse. To the extent provided in regulations, an annuity shall be
treated in a manner similar to an income interest in property (regardless of
whether the property from which the annuity is payable can be separately
identified).
(iii) Property includes interest therein The
term “property” includes an interest in property.
(iv) Specific portion treated as separate
property A specific portion of property shall be treated as separate property.
(v) Election An election under this
paragraph with respect to any property shall be made by the executor on the
return of tax imposed by section 2001.
Such an election, once made, shall be irrevocable.
(C) Treatment of survivor annuities
In the case
of an annuity included in the gross estate of the decedent under section 2039
(or, in the case of an interest in an annuity arising under the community
property laws of a State, included in the gross estate of the decedent under
section 2033) where only the surviving spouse has the
right to receive payments before the death of such surviving spouse—
(i) the interest of such surviving spouse
shall be treated as a qualifying income interest for life, and
(ii) the executor shall be treated as having
made an election under this subsection with respect to such annuity unless the
executor otherwise elects on the return of tax imposed by section 2001.
An election
under clause (ii), once made, shall be irrevocable.
(8) Special rule for charitable
remainder trusts
(A) In general
If the
surviving spouse of the decedent is the only beneficiary of a qualified
charitable remainder trust who is not a charitable beneficiary nor an ESOP
beneficiary, paragraph (1) shall not apply to any interest in such trust which
passes or has passed from the decedent to such surviving spouse.
(B) Definitions
For
purposes of subparagraph (A)—
(i) Charitable beneficiary The term
“charitable beneficiary” means any beneficiary which is an organization
described in section 170 (c).
(ii) ESOP beneficiary The term “ESOP beneficiary”
means any beneficiary which is an employee stock ownership plan (as defined in
section 4975 (e)(7)) that holds a remainder interest in
qualified employer securities (as defined in section 664
(g)(4)) to be transferred to such plan in a
qualified gratuitous transfer (as defined in section 664
(g)(1)).
(iii) Qualified charitable remainder trust
The term “qualified charitable remainder trust” means a charitable remainder
annuity trust or a charitable remainder unitrust (described in section 664).
(9) Denial of double deduction
Nothing in
this section or any other provision of this chapter shall allow the value of
any interest in property to be deducted under this chapter more than once with
respect to the same decedent.
(10) Specific portion
For
purposes of paragraphs (5), (6), and (7)(B)(iv), the term “specific portion”
only includes a portion determined on a fractional or percentage basis.
(c) Definition
For
purposes of this section, an interest in property shall be considered as
passing from the decedent to any person if and only if—
(1) such interest is bequeathed or devised
to such person by the decedent;
(2) such interest is inherited by such
person from the decedent;
(3) such interest is the dower or curtesy
interest (or statutory interest in lieu thereof) of such person as surviving
spouse of the decedent;
(4) such interest has been transferred to
such person by the decedent at any time;
(5) such interest was, at the time of the
decedent’s death, held by such person and the decedent (or by them and any
other person) in joint ownership with right of survivorship;
(6) the decedent had a power (either alone
or in conjunction with any person) to appoint such interest and if he appoints
or has appointed such interest to such person, or if such person takes such
interest in default on the release or nonexercise of such power; or
(7) such interest consists of proceeds of
insurance on the life of the decedent receivable by such person.
Except as
provided in paragraph (5) or (6) of subsection (b), where at the time of the
decedent’s death it is not possible to ascertain the particular person or
persons to whom an interest in property may pass from the decedent, such
interest shall, for purposes of subparagraphs (A) and (B) of subsection (b)(1),
be considered as passing from the decedent to a person other than the surviving
spouse.
(d) Disallowance of marital deduction
where surviving spouse not United States citizen
(1) In general
Except as
provided in paragraph (2), if the surviving spouse of the decedent is not a
citizen of the United States—
(A) no deduction shall be allowed under
subsection (a), and
(2) Marital deduction allowed for
certain transfers in trust
(A) In general
Paragraph
(1) shall not apply to any property passing to the surviving spouse in a
qualified domestic trust.
(B) Special rule
If any
property passes from the decedent to the surviving spouse of the decedent, for
purposes of subparagraph (A), such property shall be treated as passing to such
spouse in a qualified domestic trust if—
(i) such property is transferred to such a
trust before the date on which the return of the tax imposed by this chapter is
made, or
(ii) such property is irrevocably assigned
to such a trust under an irrevocable assignment made on or before such date
which is enforceable under local law.
(3) Allowance of credit to certain
spouses
If—
(A) property passes to the surviving spouse
of the decedent (hereinafter in this paragraph referred to as the “first
decedent”),
(B) without regard to this subsection, a
deduction would be allowable under subsection (a) with respect to such
property, and
(C) such surviving spouse dies and the
estate of such surviving spouse is subject to the tax imposed by this chapter,
the Federal
estate tax paid (or treated as paid under section 2056A
(b)(7)) by the first decedent with respect to
such property shall be allowed as a credit under section 2013
to the estate of such surviving spouse and the amount of such credit shall be
determined under such section without regard to when the first decedent died
and without regard to subsection (d)(3) of such section.
(4) Special rule where resident spouse
becomes citizen
Paragraph
(1) shall not apply if—
(A) the surviving spouse of the decedent
becomes a citizen of the United States before the day on which the return of
the tax imposed by this chapter is made, and
(B) such spouse was a resident of the
United States at all times after the date of the death of the decedent and
before becoming a citizen of the United States.
(5) Reformations permitted
(A) In general
In the case
of any property with respect to which a deduction would be allowable under
subsection (a) but for this subsection, the determination of whether a trust is
a qualified domestic trust shall be made—
(i) as of the date on which the return of
the tax imposed by this chapter is made, or
(ii) if a judicial proceeding is commenced
on or before the due date (determined with regard to extensions) for filing
such return to change such trust into a trust which is a qualified domestic
trust, as of the time when the changes pursuant to such proceeding are made.
(B) Statute of limitations
If
a judicial proceeding described in subparagraph (A)(ii) is commenced with
respect to any trust, the period for assessing any deficiency of tax
attributable to any failure of such trust to be a qualified domestic trust
shall not expire before the date 1 year after the date on which the Secretary
is notified that the trust has been changed pursuant to such judicial
proceeding or that such proceeding has been terminated.
