Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 56-26

1956-1 C.B. 447

Section 7122 -- Compromises

IRS Headnote

While amounts allowed for the support of the surviving spouse during the period of settlement of the deceased spouse's estate may otherwise constitute a nondeductible interest under section 2056(b) of the Internal Revenue Code of 1954, such amounts may nevertheless qualify for the estate tax marital deduction to the extent that all or any part of the residuary estate of the decedent passed from the decedent to his surviving spouse by intestacy or as beneficiary under his will.

Full Text

Rev. Rul. 56-26

Advice has been requested whether amounts paid to a surviving widow as an allowance for support will qualify for the marital deduction authorized by section 2056 of the Internal Revenue Code of 1954 under the circumstances set forth below.

The decedent died testate leaving his entire probate estate to his surviving wife. Pursuant to an order of the local probate court, the widow was entitled to an allowance for support during the period of settlement of the deceased spouse's estate.

Revenue Ruling 83, C.B. 1953-1, 395, sets forth the general rule to be followed in such cases. Such rule is to the effect that, in order to qualify for the marital deduction, a property interest in the form of an allowance made, pursuant to local law, for the support of the decedent's spouse, must be a vested right of property, such as will, in the event of the spouse's death as of any moment or time following the decedent's death, survive as an asset of her estate. Otherwise, such allowance constitutes a terminable interest within the meaning of section 2056(b) of the 1954 Code and, as such, does not qualify for the deduction.

The terminable interest rule of section 2056(b) does not apply, however, unless (1) an interest in the property also passed from the decedent (whether by will or under local law) to someone other than his surviving spouse, or the estate of such spouse , and (2) by reason of such passing such other person may possess or enjoy such property after the termination or failure of the interest therein which passed to the surviving spouse. Thus, assume a case where a decedent leaves property to his widow for life, with remainder to her estate (executors or administrators). The life estate given is clearly a terminable interest, but as no interest in the property passed to anyone other than the widow, or the estate of the widow, the rule set forth in section 2056(b) does not apply and the entire interest qualifies for the marital deduction.

The same would apply in respect of the interest of the instant decedent's widow in the form of her support allowance. Since the decedent left her his entire probate estate, no interest in the amounts awarded for her support during the settlement of the estate may, for the purposes of section 2056, be considered as having passed to any person other than his spouse, or the estate of such spouse. In other words, while the widow's death at any time following the decedent's death would have terminated her right to any further support allowance, any amounts remaining unpaid would, nevertheless, become a part of the residuary estate and, as such, would pass to her estate under the terms of her husband's will. Thus, the requirement of section 2056 of the statute, as more particularly set forth in Revenue Ruling 83, supra , has been met, and the marital deduction is allowable.

So long as the interest passing to the surviving spouse, when viewed as of the decedent's death, is an indefeasibly vested interest, it is immaterial whether the statutory requirement in the foregoing respect is satisfied by reason of the applicable provisions of the local law, by reason of the terms of the decedent's will, or otherwise. Therefore, the same rules would apply in the case of an intestate share in the decedent's estate. For example, if the decedent died intestate and one-third of his estate passed to his surviving spouse as absolute owner under the intestacy laws of the jurisdiction, then one-third of any amounts paid out of the estate, pursuant to local law, for the support of such spouse, is a deductible interest since, to that extent, it in effect merely represents an advancement from property which is already indefeasibly hers, and will pass to her, or to her estate, in any event.

In view of the foregoing, it is held that while amounts allowed for the support of the surviving spouse during the period of settlement of the deceased spouse's estate may otherwise constitute a nondeductible interest under section 2056(b) of the Internal Revenue Code of 1954, such amounts may nevertheless qualify for the estate tax marital deduction to the extent that all or any part of the residuary estate of the decedent passed from the decedent to his surviving spouse by intestacy or as beneficiary under his will.