Intrafamily sale of remainder was bona fide

Article Abstract:

The US Court of Appeals for the Fifth Circuit held in Wheeler that, under IRC section 2036(a), a father's sale to his sons of a remainder interest in his ranch was a bona fide sale for an adequate and full consideration, which resulted in the ranch not being included in his estate. The father, sons, and, later, the estate properly executed and filed the required documents and used the Treasury Dept's actuarial tables to determine value. The sons receiving gifts from the father after the sale was not evidence of a sham. Section 2702 applied, valuing the remainder interest at full fee.

Remainders (Estates), Transfer (Law)

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State apportionment statute controlled payment of estate taxes, rules CA-6

Article Abstract:

Tax allocation clauses should be included in wills in order to ensure proper execution of decedents' wishes. A 1996 Sixth Circuit ruling in the Swallen estate case held that Ohio's apportionment law correctly directed the estate taxes to be paid from the heirs' inter vivos trust, despite the testator's opposite intent. The will had directed the payment of the taxes from residue, but the court found state law to be controlling in this case.

Decedents, Laws, regulations and rules, Exclusive and concurrent legislative powers, Preemption (Legislative power), Allocation (Taxation), Tax allocation

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