Federal Estate Tax-Determination of Marital Deduction in Community Property State When Surviving Spouse Elects to Take Under Decedent’s Will

Decedent, a Texas resident, provided that if his wife elected to take under his will she would receive one-third of the total community property and one-third of his separate estate. The remaining two-thirds of decedent’s total estate was devised in trust for the benefit of his children. The widow elected to take under the will, thereby allowing her interest in the community property to pass as provided in the will. The executors claimed a marital deduction for the one-third separate property passing to the widow. Since she received less under the will than the value of her relinquished community property, the government disallowed the deduction. After paying the deficiency, the executors brought suit for a refund. The district court held that the bequest of one-third separate property qualified for the marital deduction. On appeal, held, affirmed, one judge dissenting. In determining the amount of the marital deduction, the value of the separate property passing to the surviving spouse is not reduced by the value of her relinquished community property passing under the will to decedent’s children. United States v. Stapf, 309 F.2d 592 (5th Cir. 1962), cert. granted, 372 U.S. 928 (1963).