From: Richard Ressler Sent: Thursday, July 3, 2014 1:44 AM To: Ada Clapp Cc: Richard Ressler John J. Hannan ( 1 Barry J. Cohen; Jeffrey E.; Eileen Alexanderson; Halperin, Alan S Subject: Re: East 7Oth Street townhouse purchase What are the "rights Debra wouldn't receive with a second life term interes=" that if given would qualify for the marital deduction? We can discuss t=morrow. On Jul 2, 2014, at 5:52 PM, "Ada Clapp" wrote: Richard, Let me see if I can articulate Jeffrey's comments and reiterate what I tr=ed to convey (not very effectively) early on in the discussion. The split-interest property purchase is an estate planning technique design=d to fit within an "exception" to a provision of the tax Code (under S=ction 2702) that would otherwise trigger a gift tax where family members p=rchase "term" interests (such as a life interest and a remainder inter=st) in a residence. To fit within the exception, and avoid any one famil= member purchasing a term interest from making a gift to another family me=ber purchasing a term interest, each family member who participates in the=split purchase of the residence must pay the actuarial value of his or her=term interest—with his or her own funds. If Debra uses funds Leon gives her, the IRS treats this as if Leon purchase= both his and Debra's term interests and then made a gift to Debra of h=r term interest, which gift would be taxable to Leon as it would not qual=fy for a marital deduction. To qualify for a marital deduction, the spous= must either receive the property outright or be given certain rights to t=e property which Debra would not have with a second life term interest. Even assuming Debra is willing to use her independent funds in connection w=th a split purchase of a residence, there are other factors to consider in=deciding the best way to structure the split purchase. In addition to the=pros and cons outlined in the chart I sent you, there is a certain comfort=level regarding