26 U.S.C. § 2056: Bequests, etc., to surviving spouse

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. 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 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; 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. 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. 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 such termination or failure does not in fact occur. 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 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. the interest or such portion thereof so passing shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and 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. such amounts shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and no part of such amounts shall, for purposes of paragraph (1)(A), be considered as passing to any person other than the surviving spouse. for purposes of subsection (a), such property shall be treated as passing to the surviving spouse, and for purposes of paragraph (1)(A), no part of such property shall be treated as passing to any person other than the surviving spouse. which passes from the decedent, in which the surviving spouse has a qualifying income interest for life, and to which an election under this paragraph applies. 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 no person has a power to appoint any part of the property to any person other than the surviving spouse. The term “property” includes an interest in property. A specific portion of property shall be treated as separate property. 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. the interest of such surviving spouse shall be treated as a qualifying income interest for life, and 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. 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. The term “charitable beneficiary” means any beneficiary which is an organization described in section 170(c). 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)). The term “qualified charitable remainder trust” means a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664). 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. 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. such interest is bequeathed or devised to such person by the decedent; such interest is inherited by such person from the decedent; such interest is the dower or curtesy interest (or statutory interest in lieu thereof) of such person as surviving spouse of the decedent; such interest has been transferred to such person by the decedent at any time; 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; 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 such interest consists of proceeds of insurance on the life of the decedent receivable by such person. no deduction shall be allowed under subsection (a), and section 2040(b) shall not apply. Paragraph (1) shall not apply to any property passing to the surviving spouse in a qualified domestic trust. 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 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. property passes to the surviving spouse of the decedent (hereinafter in this paragraph referred to as the “first decedent”), without regard to this subsection, a deduction would be allowable under subsection (a) with respect to such property, and such surviving spouse dies and the estate of such surviving spouse is subject to the tax imposed by this chapter, 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 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. as of the date on which the return of the tax imposed by this chapter is made, or 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. 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. Except as provided in subparagraph (B), the amendment made by subsection (a) [amending this section] shall apply to the estates of decedents dying after the date of the enactment of this Act [ Oct. 24, 1992 ]. the decedent dies on or before the date 3 years after such date of enactment, or the decedent was, on such date of enactment, under a mental disability to change the disposition of his property and did not regain his competence to dispose of such property before the date of his death. The amendments made by subsection (b) [amending section 2523 of this title ] shall apply to gifts made after the date of the enactment of this Act [ Oct. 24, 1992 ].” the amendment made by subsection (a) [amending this section] shall apply with respect to decedents dying after December 31, 1981 , and the amendment made by subsection (b) [amending section 2523 of this title ] shall apply to transfers after December 31, 1981 . In the case of any estate or gift tax return filed before the date of the enactment of this Act [ Nov. 10, 1988 ], the amendments made by this section [amending this section and section 2523 of this title ] shall not apply to the extent such amendments would be inconsistent with the treatment of the annuity on such return unless the executor or donor (as the case may be) otherwise elects under this paragraph before the day 2 years after the date of the enactment of this Act. The time for making an election under section 2056(b)(7)(C)(ii) or 2523(f)(6)(B) of the 1986 Code (as added by this subsection) shall not expire before the day 2 years after the date of the enactment of this Act (and, if such election is made within the time permitted under this paragraph, the requirement of such section 2056(b)(7)(C)(ii) that it be made on the return shall not apply).” Except as otherwise provided in this subsection, the amendments made by this section [enacting sections 2044 and 2207A of this title, amending this section and sections 691, 2012, 2035, 2040, 2045, 2046, 2519, 2523, 2602, and 6019 of this title, and repealing sections 2515 and 2515A of this title] shall apply to the estates of decedents dying after December 31, 1981 . The amendments made by paragraphs (1), (2), and (3)(A) of subsection (b) [amending sections 2523 and 6019 of this title], subparagraphs (B) and (C) of subsection (c)(3) [amending section 6019 of this title and repealing sections 2515 and 2515A of this title], and paragraphs (2) and (3)(B) of subsection (d), and paragraph (4)(A) of subsection (d) (to the extent related to the tax imposed by chapter 12 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) [enacting sections 2207A and 2519 of this title and amending section 2523 of this title ] shall apply to gifts made after December 31, 1981 . the decedent dies after December 31, 1981 , by reason of the death of the decedent property passes from the decedent or is acquired from the decedent under a will executed before the date which is 30 days after the date of the enactment of this Act [ Aug. 13, 1981 ], or a trust created before such date, which contains a formula expressly providing that the spouse is to receive the maximum amount of property qualifying for the marital deduction allowable by Federal law, the formula referred to in subparagraph (B) was not amended to refer specifically to an unlimited marital deduction at any time after the date which is 30 days after the date of enactment of this Act [ Aug. 13, 1981 ], and before the death of the decedent, and the State does not enact a statute applicable to such estate which construes this type of formula as referring to the marital deduction allowable by Federal law as amended by subsection (a), Except as provided in subparagraph (B), the amendment made by subsection (a) [amending this section] shall apply with respect to the estates of decedents dying after December 31, 1976 . the decedent dies after December 31, 1976 , and before January 1, 1979 , by reason of the death of the decedent property passes from the decedent or is acquired from the decedent under a will executed before January 1, 1977 , or a trust created before such date, which contains a formula expressly providing that the spouse is to receive the maximum amount of property qualifying for the marital deduction allowable by Federal law, the formula referred to in clause (ii) was not amended at any time after December 31, 1976 , and before the death of the decedent, and the State does not enact a statute applicable to such estate which construes this type of formula as referring to the marital deduction allowable by Federal law as amended by subsection (a),