Opinion ID: 2995367
Heading Depth: 2
Heading Rank: 2

Heading: Durational Requirement

Text: In addition to their contingent nature, the Tax Court also found that the spousal interests contained in the Cooks’ 1993 and 1995 GRATs were not qualified interests because they violated the durational requirements of Treas. Reg. sec. 25.2702-3(d)(3). We agree with the Tax Court on this point as well. When, as here, a grantor retains the right to revoke a spousal interest, the spousal interest itself is considered to be retained by the grantor. A grantor- retained interest must be for the life of the term holder, or for a specified term of years, or for the shorter (but not the longer) of those periods. Id. (emphasis added). In the case at bar, the spousal interests created by the Cooks can exist for the life of the grantor or for a term of years, regardless of which term is shorter./4 As both the Tax Court and the appropriate regulations have demonstrated, this is impermissible.