T.C. Memo. 2007-371
UNITED STATES TAX COURT
ESTATE OF KWANG LEE, DECEASED,
ANTHONY J. FRESE, EXECUTOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14511-06. Filed December 20, 2007.
D died 46 days after his wife, W. D’s estate
claimed a marital deduction for property that was
transferred to W as if W had survived D. W’s will
states that D is deemed to have predeceased W for
purposes of W’s will if D dies within 6 months after
W’s death. Although not stated specifically in D’s
will, D’s intention for purposes of D’s will was that W
also be deemed to have survived D if D died within 6
months after W’s death.
Held: D’s testamentary intent that D be deemed to
have predeceased W will not be recognized as qualifying
the estate for the marital deduction for Federal estate
tax purposes because sec. 2056, I.R.C., requires that a
spouse actually survive his or her spouse in order to
be a “surviving spouse”.
-2-
Barbara L. de Mare, for petitioner.
Lisa M. Rodriguez, for respondent.
MEMORANDUM OPINION
LARO, Judge: Anthony J. Frese (Frese), acting in his
capacity as executor of the Estate of Kwang Lee and with a
mailing address in Hackensack, New Jersey, petitioned the Court
to redetermine respondent’s determination of a Federal estate tax
deficiency of $1,020,129, a section 6662(a) accuracy-related
penalty of $204,026, and a section 6651(a)(1) addition to tax of
$255,032 for untimely filing.1 Currently, this case is before
the Court on respondent’s motion for partial summary judgment
under Rule 121. Respondent argues that he properly disallowed a
marital deduction claimed by the Estate of Kwang Lee (decedent’s
estate) because Kwang Lee (decedent) was not survived by his
wife, Kyong Lee (Ms. Lee). Petitioner argues that decedent’s
estate may benefit from the marital deduction because Ms. Lee
survived decedent by operation of decedent’s and Ms. Lee’s
respective wills. We decide whether the estate qualifies for the
marital deduction under section 2056. We hold it does not.
1
Rule references are to the Tax Court Rules of Practice and
Procedure. Unless otherwise noted, section references are to the
applicable versions of the Internal Revenue Code (Code).
-3-
Background
Ms. Lee died testate on August 15, 2001, leaving a Last Will
and Testament dated June 21, 2001 (Ms. Lee’s will). Ms. Lee’s
will was admitted to probate on September 14, 2001, on which day
letters testamentary were issued to decedent.
Decedent died testate on September 30, 2001, also leaving a
Last Will and Testament dated June 21, 2001. Decedent’s will was
admitted to probate, and letters testamentary were issued to
Frese as successor executor. After decedent’s death, Frese was
appointed successor executor of Ms. Lee’s estate pursuant to Ms.
Lee’s will. The wills of decedent and Ms. Lee were drafted by
petitioner’s counsel, Barbara L. de Mare (Ms. de Mare).
When the estate planning was performed, decedent and Ms. Lee
suffered from a serious and ultimately fatal disease. Decedent
and Ms. Lee had three children in their twenties and wished to
establish trusts for those children. Decedent had been a
corporate executive and, because of the nature of his work
benefits, most of the assets of decedent and Ms. Lee were held in
decedent’s name. The joint assets and the assets titled in Ms.
Lee’s name alone constituted only a minimal portion of the
combined estates.
Through their wills, a major objective of decedent and Ms.
Lee was to obtain the maximum tax benefits for their respective
estates. To fulfill this goal, Ms. de Mare drafted the wills
-4-
with the following survivorship provisions. Article 9 of Ms.
Lee’s will states: "Ninth: For purposes of this Will, any
person who shall die within six (6) months after my death shall
be deemed to have predeceased me”. Conversely, decedent’s will
states:
NINTH: A. For purposes of this Will, any person,
other than my wife, who shall die within six (6)
months after my death shall be deemed to have
predeceased me.
B. In the event that my wife shall die at the same
time as I, or under circumstances such as to render it
difficult or impossible to determine who died first, my
wife shall be deemed to have survived me.
Decedent and Ms. Lee intended that Ms. Lee be deemed to have
survived decedent if decedent died within 6 months after the
death of Ms. Lee.
The estates of decedent and Ms. Lee were administered as
though decedent had predeceased Ms. Lee. The estate tax returns
were filed as if decedent died first, and a credit shelter trust
was established in decedent’s name with the residuary thereof
transferred to Ms. Lee as if she were still alive. Decedent’s
estate’s tax return claimed the marital deduction as to the
residuary purportedly transferred to Ms. Lee.
Discussion
A. Summary Judgment
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
-5-
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy “if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law.” Rule 121(a) and (b); Sundstrand
Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994). The moving party bears the burden of proving
that there is no genuine issue of material fact, and factual
inferences are drawn in a manner most favorable to the party
opposing summary judgment. Dahlstrom v. Commissioner, 85 T.C.
812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344
(1982). Petitioner has raised no genuine issue as to any
material fact. Accordingly, we conclude that this case is ripe
for partial summary judgment.
B. Marital Deduction
Deductions are strictly a matter of legislative grace, and
petitioner must show that the claimed deduction is allowed by the
Code. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
Petitioner argues that decedent intended that Ms. Lee be deemed
to have survived him were he to die within 6 months after her.
Petitioner argues that this intent establishes the ordering of
-6-
decedent’s and Ms. Lee’s deaths for estate and related tax
purposes. To this end, petitioner relies on section 2056(b)(3):
(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.
Petitioner argues that section 2056(b)(3) permits the actual
order of the death of spouses to be altered for estate and
related tax purposes as long as the deaths are still within
6 months of each other.
Respondent argues that the marital deduction requires an
actual surviving spouse. Because Ms. Lee died 46 days before
decedent, respondent argues, decedent had no surviving spouse and
decedent’s estate is not entitled to benefit from the marital
deduction. Respondent argues that the wills of decedent and Ms.
Lee cannot operate to change the order of their deaths.
Respondent further argues that the term “survivor” is undefined
in the Code and therefore must be given its normal and customary
-7-
meaning. Respondent states that the plain meaning of “survivor”
is one who outlives another.
We begin our analysis with the applicable statute. Section
2056(a) provides for a marital deduction from the value of a
decedent’s gross estate:
SEC. 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE.
(a) Allowance of Marital Deduction. * * * the
value of the taxable estate shall * * * 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.
This provision permits a deduction from the value of a decedent’s
gross estate of an amount equal to the value of property
interests that pass from a decedent to his or her surviving
spouse. By its terms, section 2056 predicates the marital
deduction on the presence of a “surviving spouse”. See also sec.
20.2056(a)-1(a), Estate Tax Regs.
We find petitioner’s reliance on section 2056(b)(3) to be
misplaced. Petitioner argues that section 2056(b)(3) permits a
change in the order of the deaths of a husband and wife if they
die within 6 months of each other. We disagree. We do not read
section 2056(b)(3) to permit any modification to the timing of
the actual deaths of a husband and wife. Instead, we read
section 2056(b)(3) to permit a marital deduction even if the
passing of an interest to a surviving spouse is conditioned upon
-8-
the spouse’s surviving the decedent by a period not exceeding
6 months, provided the spouse in fact survives the requisite
6 months, and thus the condition is satisfied. See Estate of
Mackie v. Commissioner, 64 T.C. 308, 312 (1975), affd. 545 F.2d
883 (4th Cir. 1976); Estate of Shepherd v. Commissioner, T.C.
Memo. 1989-610.
As to the term “surviving spouse”, we construe that term in
accordance with its ordinary meaning. See United States v. Am.
Trucking Associations, Inc., 310 U.S. 534, 543-544 (1940);
Venture Funding, Ltd. v. Commissioner, 110 T.C. 236, 241-242
(1998), affd. without published opinion 198 F.3d 248 (6th Cir.
1999). The ordinary meaning of the word “survivor” is one who
survives another; i.e., one who outlives another. Building on
this definition, the term “surviving spouse” requires that a
spouse actually survive his or her spouse; i.e., the later-dying
spouse must actually outlive his or her spouse. Because Ms. Lee
did not actually survive decedent, i.e., Ms. Lee predeceased
decedent, we conclude that Ms. Lee is not a surviving spouse
within the meaning of section 2056(a). While decedent may have
intended that Ms. Lee, even though dead, be deemed to have
survived him, the operation of a will or wills cannot alter the
order of the actual deaths of decedent and Ms. Lee. Cf. sec.
20.2056(c)-2(e), Tax Regs. (a presumption, whether supplied by
local law, the decedent's will, or otherwise, may operate to
-9-
determine the order of the deaths of spouses if the actual order
of their deaths cannot be determined).
An appropriate order will be issued granting respondent’s
motion for partial summary judgment. We have considered all
arguments by petitioner for a holding contrary to that which we
reach herein. To the extent not discussed, we conclude that
those arguments are irrelevant or without merit.
An appropriate order will
be issued.