Estate of Rapp v. Commissioner
United States Court of Appeals for the Ninth Circuit
140 F.3d 1211 (1998)
After a probate court reformed Bert's original trust to require annual income distributions and add QTIP-election language based on Laura's claim that reformation reflected Bert's true intent, the estate's executor (plaintiff) claimed the marital deduction for the reformed trust, but the IRS (defendant) allowed the deduction only for property passing directly to Laura, and the Tax Court found the original will unambiguous with no evidence of any actual QTIP intent, holding the state reformation wasn't binding absent affirmance by the state's highest court.
Whether the decision of a state court in a proceeding brought for the purpose of directly affecting federal estate tax liability will be binding on a federal court for estate tax purposes if the decision has not been affirmed by the state's highest court.