One plus one equals two - sometimes! (estate tax valuation of property held in a qualified terminable interest property trust)

• Jurisdiction: United States
• Author: Rhine, David S.
• Date: 01 May 1997

The whole is equal to the sum of its parts--sometimes. A recent Fifth Circuit case points up that the traditional answer is not always true, at least when it comes to valuation.

An estate is taxed on property interests held in several different forms. In addition to property held outright by a decedent, the estate will be taxed on interests over which the decedent held a general power of appointment, as well as trusts in which there is an interest that qualified for qualified terminable interest property (QTIP) treatment. All will be taxed in the estate.

It is well-settled that the concept of the willing buyer-willing seller used for valuing property interests includes premiums and discounts, depending on the size of the interest transferred. But what is the size of the transferred interest?

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