Children Made Huge Gifts When They Agreed to Early Termination of QTIP Trust With All Assets Passing To Their Father
In McDougall v. Commissioner, 163 T.C. 112 (2024), the court ruled that a deceased mother’s two children (Linda Lewis and Peter McDougall) made gifts when they agreed that the QTIP trust created under their mother’s will would be terminated and all the assets would pass to their father. This memorandum opinion determines the value of those gifts, concluding that each child made a gift of about $35 million. The court held that the value of the gifts was not reduced by the father’s testamentary limited power of appointment. In reaching that conclusion, the court interpreted the mother’s intent as to how the QTIP assets would have been divided upon an early termination of the trust if the children had not agreed that all the assets would pass to their father.
