Could an executor make an irrevocable QTIP marital-deduction election for Rhode Island estate-tax purposes without making the same election for federal estate tax?

Plain-English summary

An executor or other fiduciary could make a QTIP marital-deduction election for Rhode Island estate-tax purposes without making the same election for federal estate tax. The Rhode Island election was separate, independent, and irrevocable.

The ruling applied to decedents dying on or after January 1, 2002. Rhode Island's estate-tax statute calculated tax by reference to the maximum federal credit for state death taxes under the federal law in effect on January 1, 2001, while holding the unified exemption at $675,000.

Because Rhode Island adopted the relevant January 1, 2001 federal provisions for its calculation, an estate could claim the Rhode Island QTIP marital deduction if the property satisfied IRC § 2056(b)(7). A matching federal QTIP election was not required.

The state-only election carried the corresponding later-estate consequence. The federal code provision identified by the ruling included QTIP property in the surviving spouse's gross estate, and the Division said the same result would apply for Rhode Island estate-tax purposes.

What this means for you

Executors and fiduciaries

The state election could be made independently of the federal return on the law applied in this order, but it was irrevocable. Document the property, eligibility requirements, and election clearly.

Surviving spouses and estate planners

The first estate's marital deduction was paired with later inclusion in the surviving spouse's Rhode Island gross estate. Consider both estates in the planning analysis.

Tax preparers

This ruling used a fixed historical version of federal law. Confirm which Rhode Island election procedures and federal references apply to the current decedent before preparing a return.

Common questions

Was a federal QTIP election required? No. The Rhode Island election could be separate and independent.

Was the Rhode Island election revocable? No. The ruling described it as irrevocable.

What requirements applied to the property? The QTIP requirements of IRC § 2056(b)(7), using the federal code in effect on January 1, 2001, had to be met.

What happened when the surviving spouse later died? The elected QTIP property's value was included in the surviving spouse's Rhode Island gross estate under the § 2044 treatment applied by the ruling.

Which deaths did the order address? Decedents dying on or after January 1, 2002.

Citations and references

• R.I. Gen. Laws § 44-22-1.1(a)(2) — Rhode Island estate tax for decedents dying on or after January 1, 2002.
• 26 U.S.C. § 2011 — federal state-death-tax credit reference used in Rhode Island's calculation.
• 26 U.S.C. § 2056(b)(7) — QTIP marital-deduction requirements.
• 26 U.S.C. § 2044 — later inclusion of QTIP property in the surviving spouse's gross estate.

Source

• Landing page: Rhode Island Declaratory Rulings
• Declaratory order: Declaratory Order 2003-03

Original ruling text

Ruling Request No. 2003-03

Ruling Request No. 2003-03

Request for Ruling Relating to Election of Marital Deduction for Qualified Terminable Interest Property ("QTIP")

On behalf of your client you request a ruling regarding the administration of the Rhode Island Estate Tax Law as it relates to the election of a marital deduction for qualified terminable interest property ("QTIP") for Rhode Island estate tax purposes. Specifically you ask whether for decedents dying on or after January 1, 2002, may an executor or other fiduciary elect a marital deduction for qualified terminable interest property (":QTIP") for Rhode Island estate tax purposes but not for federal estate tax purposes?

Discussion

The federal estate tax act was amended by the Economic Growth and Tax Relief Reconciliation Act of 2001,phasing out the federal credit for state death taxes under section 2001 and to raise the exemption amounts under section 2010.

Rhode Island General Law §44-22-1.1(a)(2) imposes a tax on the net estate of decedents dying on or after January 1, 2002. This tax is equal to the maximum credit for state death taxes allowed by 26 USC§2011, as the latter section was in effect on January 1, 2001, but holding the unified exemption to $675,000.00.

Ruling Requested

For decedents dying on or after January 1, 2002, an executor or other fiduciary may elect a marital deduction for QTIP property for Rhode Island estate tax purposes. The executor or other fiduciary is not required to have made the same QTIP election for federal estate tax purposes in order to make the election for Rhode Island purposes.

Ruling

For decedents dying on or after January 1, 2002 and executor or other fiduciary may elect a marital deduction for qualified terminable interest property ("QTIP") under U.S.Code section 2056(B))7) under Rhode Island General Laws §44-22-1.1 (references to the US Code are those that were in effect on January 1, 2001).

The code in effect on January 1, 2001, (adopted under Rhode Island General Laws §44-22-1.1) allows an estate tax marital deduction for QTIP property provided the requirements of Code Section 2056(B)(7) are met and therefore a marital deduction for Rhode Island estate tax purposes will be allowed. Section 2044 of the federal Code in effect on January 1, 2001, included the value of QTIP property in the gross estate of the surviving spouse and that same result will occur for Rhode Island estate tax purposes.

This ruling provides the executor or other fiduciary to make an election that becomes irrevocable and separate from and independent of any election made by the executor or other fiduciary for federal estate tax purposes.

This ruling shall be valid until expressly revoked or until the applicable statutory provisions of law are amended in a manner that requires a different result

**R. GARY CLARK

TAX ADMINISTRATOR

APRIL 16, 2003**