26 U.S.C. § 2056 : US Code - Section 2056: Bequests, etc., to surviving spouse

Search 26 U.S.C. § 2056 : US Code - Section 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
          (B) section 2040(b) shall not apply.
      (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.