Baillie v. Raoul

Illinois Appellate Court
Civil Court
Trusts and Estates
Case Number: 
2019 IL App (4th) 180655
Decision Date: 
Wednesday, October 16, 2019
4th Dist.
Ford Co.

Plaintiff sued the State, arguing that the State had improperly valued the estate tax applied to three joint tenancy parcels.  The State argued that each joint tenancy parcel was a qualified joint interest and therefore, the value is derived from section 2040(b)(2)(B) which states that value of the qualified joint interest is the fair market price divided by two.  Plaintiff argues that because she made a qualified disclaimer of her survivorship interest in the three joint tenancy parcels and the interests in the parcels passed into the deceased estate and, in turn, to their daughters, the proper valuation is the fair market value under section 2033 of the Internal Revenue Code, which allows a fractional interest discount, a reduction in value to account for the necessity of accommodating cotenants.  The trial court held that the State's valuation was correct.  The joint tenancy parcels still met section 2040(b)(2)(B) definition of a qualified joint interest and therefore, the fair market value divided by two was how a decedent's share of a qualified joint interest should be valued.  The Appellate Court affirmed and stated that because the married couple held the three parcels in a joint tenancy with right of survivorship until the decedent's death, section 2040 (b)(1) still applied and the Plaintiff's disclaimer of the survivorship interest did not change that.  Once the descendent dies, section 2040(b)(2)(B) valuation is triggered.  (HOLDER WHITE and HARRIS, concurring.)