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Rev. Rul. 92-26, 1992-14 I.R.B. 8, analyzes the application of the GST predeceased child exception to a QTIP trust. The deaths described in the ruling occurred in the following order:
the decedent, then the child (referred to as the "predeceased child"), and then the surviving spouse. The decedent's Will established two QTIP trusts: QTIP trust 1 and QTIP trust 2. The decedent's executor made the "reverse QTIP election" under sec2652(a)(3)(A) with respect to QTIP trust 1. Under this election, trust 1 is treated, for generation-skipping tax purposes, as if the QTIP election had not been made. No reverse QTIP election was made with respect to QTIP trust 2.
Both QTIP trusts, of course, provide for income to the surviving spouse for life. At the death of the surviving spouse, both trusts are to be distributed to the grandchild of the decedent and the surviving spouse. The grandchild was the child of the predeceased child.
Section 2612(c)(2)...