United States v. Stapf

Lowell Stapf died while domiciled in Texas, a community-property state. In community-property states, the death of a married person meant that half of the property held in community passed automatically to the surviving spouse. That half was not treated as a transfer from the decedent’s estate and, thus, was not subject to estate tax. Stapf died with a will, and his wife had the option to either inherit property according to the mechanisms in the will or, alternatively, to take her one-half share of the community property. Mrs. Stapf chose to take under the will. The will granted Mrs. Stapf one-third of the total community property, plus one-third of Stapf’s separate estate. Additionally, the will required that, by making this choice, Mrs. Stapf’s one-half share in the community property go to a trust for the benefit of the couple’s children. As it turned out, Mrs. Stapf’s election caused Mrs. Stapf ultimately to receive slightly less money than she would have had she chosen not to follow the will. Because Mrs. Stapf gained no benefit by electing to inherit under the will, the Internal Revenue Service (IRS) (defendant) denied Stapf’s estate (plaintiff) any marital deduction. The estate challenged that determination. The district court allowed the marital deduction, as did the court of appeals. The United States Supreme Court granted certiorari.