ÿWPC!# …# VUNa %¯ 0 DµbùUF 0`G w@§ 4ç û 0ˆ 0D’ 0JÖ 0T t 0^| 0hÚ 0rB 0|´ 0†0 0¶ 1uF 0d»U > D3]‘ B! 0@>U 6~B)´DCÝ AM U*m2—[ÉŒ$°b³v~+vÓ© AO|!ÆË! 0D‘" D/Õ" B#˜HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀÌÀääÀÀÌ0 (ÈhH  Z ‹6Times New Roman RegularX(óf$¡¡Ò€°ÒÒÀ°Ò- ù-<à09Z ‹.Courier New Regular(83‚ª$©©Ý ƒóf!ÝÒ€°ÒÒÀ°ÒÝ  Ý —˜™Uše›UœPžDŸÓ€«g6"3|x±(8(3ß«$¤¤Ý ƒóf!ÝÒ€°ÒÒÀ°ÒÝ  Ýà Ø àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman,,,,'ÿÿdxd ‡Ý ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ )ÝÝ  ÝÌÌÌ d("ÿÿ$££Ò  ÒÒ  Ò< Œ 9p`(Courier New% Line 7 d////7Border 1dd€-0Cþÿ << Gÿÿ< Œ 9p`(Arial (Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÔ€2ÔÔ€2ÔÓ  ÓÔ YYY ÔFILEDÔ€2XÔÌÌò òJanuaryÏ27,Ï1997ÌÌCecilÏCrowson,ÏJr.ÌÔ€2ôÔAppellateÏCourtÏClerkó ó QÝ ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€.ÔÔ€.ôÔThe€record€shows€some€discrepancies€in€these€values,€but€the€exactÏamounts€are€not€material€for€the€purposes€of€this€opinion.Ì ‚Ý ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€)ôÔÔ€.ÔThis€opinion€must€not€be€read€as€authority€regarding€the€rationaleÏof€the€United€States€Tax€Court€in€òòEstate€of€Williams€v.€Commissioner€ofÏInternal€Revenueóó,€103€T.C.€451€(1994),€that€of€the€Court€of€Appeals€inÏthis€case,€or€that€of€the€trial€court€in€this€case.€€The€procedureÏfollowed€by€the€probate€court€constitutes€a€significant€departure€fromÏprior€law€and€may€invite€examination€of€Section€31„4„101€by€theÏlegislature.Ì ùÝ ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€.ÔÔ€.ôÔTenn.€Code€Ann.€ðð€31„4„101€(1984).Ì XÝ ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€.ÔÔ€.ôÔòòSeeóó€Tenn.€Const.€art.€I,€ðð€20€("That€no€retrospective€law,€or€lawÏimpairing€the€obligations€of€contracts,€shall€be€made.").Ì Ý ƒ!ÝÑ#€d#ÑÔ€)ÔÒ € ÒÒ À ÒÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÔ€.ÔÔ€.ôÔòòSeeóó€Tenn.€Code€Ann.€ðð€31„4„101(b)€(Supp.€1996).ÌPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'hStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  h HD: Geneva ÒÒ  h HD: Geneva Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€)ÔÒ € ÒÒ À ÒÝ  Ý›Ñ , ÑÑ\R AØ'\ÑÑ\R AØ'\ÑÑ€ÑÑ7€k³XXdÖdÈ7ÑÖ€+ÖÑ  ќԀ.Ô›Þ ÞÌà àà àà àà àà àà àœà àJanuary€27,€1997Ìà àà àà àà àà àà à›à àòòFOR€PUBLICATIONóóÌ̜ـ€ÙßR€130A1-j|Ͻ` à. `€€@ÿRß›à@ àIN€THE€SUPREME€COURT€OF€TENNESSEEÌÌà@ àAT€JACKSONÌÌÌÌESTATE€OF€ATLAS€DUNCAN€à àà à(ÌWILLIAMS,€DECEASED,€CAROLYNà à(ÌS.€WILLIAMS,€EXECUTRIX,à àà à(Ìà àà àà àà àà àà à(Ìà àPlaintiff„Appellant,à à(Ìà àà àà àà àà àà à(€€Shelby€ChanceryÌà àà àà àà àà àà à(ÌÒ € ÒÒ à Òà àà àà àà àà àà à(€€Hon.€D.€J.€Alissandratos,Ìv.à àà àà àà àà àà à(€€ChancellorÌà àà àà àà àà àà à(Ìà àà àà àà àà àà à(€€No.€02S01„9607„CH„00062Ìà àà àà àà àà àà à(ÌJOE€B.€HUDDLESTON,€à àà àà à(ÌCOMMISSIONER€OF€REVENUE€OF€à à(ÌTHE€STATE€OF€TENNESSEE,à àà à(Ìà àà àà àà àà àà à(Ìà àDefendant„Appellee.à àà à(ÌÌÌÌòòFor€Plaintiff„Appellantóó:à àà àà àòòFor€Defendant„Appelleeóó:ÌÌAllan€J.€Wadeà àà àà àà àà àCharles€W.€BursonÌMemphisà àà àà àà àà àà àAttorney€General€&€ReporterÌà àà àà àà àà àà àà àNashvilleÌÌOF€COUNSEL:à àà àà àà àà àDaryl€J.€BrandÌà àà àà àà àà àà àà àSenior€CounselÌBaker,€Donelson,€Bearman,à àà à€€€Attorney€General's€OfficeÌ€€€&€Caldwellà àà àà àà àà àNashvilleÌMemphisÌÌÌœ›à@ àòòò òO€P€I€N€I€O€Nóóó óÌÌÌÌJUDGMENT€OF€COURT€OF€APPEALSÌSET€ASIDE;€JUDGMENT€OF€TRIAL€ÌCOURT€œAFFIRMED;€CASE€REMANDED.›à àà àà àREID,€J.ÌÒ € ÒÒ À Ò€Ó` °‚X.h—XÓÓÓà àThis€case€presents€for€review€the€decision€of€theÏCourt€of€Appeals€that€where€the€surviving€spouse€has€electedÏagainst€the€decedent's€will€and€taken€the€statutory€electiveÏshare€the€maximum€allowable€deduction€for€TennesseeÏinheritance€tax€purposes€is€the€value€of€the€elective€shareÏless€an€amount€equal€to€one„third€of€the€decedent's€securedÏdebts.€€That€decision€is€reversed,€and€the€judgment€of€theÏtrial€court€that€the€entire€value€of€the€elective€shareÏqualifies€for€the€marital€deduction€is€reinstated.ÌÌà@ àòòò òTHE€CASEóóó óÌÌà àThe€decedent,€Atlas€Duncan€Williams,€died€testate€aÏresident€of€Shelby€County,€Tennessee,€on€May€17,€1989,Ïsurvived€by€his€widow,€Carolyn€S.€Williams,€who€qualified€asÏthe€executrix€of€the€estate.€€The€decedent's€gross€estate€wasÏapproximately€$102,902,698,€which€was€composed€of€realÍproperty€valued€at€approximately€$58,196,557€and€personalÏproperty€of€approximately€$44,706,141.€€The€real€property€hadÏbeen€pledged€by€the€decedent€to€secure€debts€in€theÏapproximate€amount€of€$37,745,758.€€There€were€unsecured€debtsÏof€approximately€$225,279.× ƒ4 ××  ×ÌÌà àPursuant€to€the€procedure€set€forth€in€Tenn.€CodeÏAnn.€ðð€31„4„102€(Supp.€1996),€the€widow€filed€a€petitionÏexercising€her€right€to€elect€against€the€decedent's€will€andÏtake€an€elective€share€as€authorized€by€Tenn.€Code€Ann.€ðð€31„4„101€(Supp.€1996).€€The€probate€court€calculated€the€electiveÏshare€by€first€subtracting€from€the€sum€of€the€total€estateÏthe€amounts€of€the€funeral€expenses,€administration€expenses,Ïand€the€widow's€year€support,€and€dividing€that€sum€by€three,Ïproducing€the€quotient€of€$42,082,993.52.€€The€amounts€of€theÏdecedent's€debts€were€not€considered€in€making€theÏcalculation.€€The€probate€court€approved€the€executrix'sÏchoice€of€unencumbered€personal€property,€corporate€stock€andÏcash,€with€which€to€fund€the€elective€share.€€ÌÌà àThe€executrix€insists€that€the€total€amount€of€theÏelective€share€as€calculated€by€the€probate€court€qualifiesÏfor€the€inheritance€tax€marital€deduction€under€Tenn.€CodeÏAnn.€ðð€67„8„315(a)(6)€(1994).€€The€Commissioner€does€notÏchallenge€the€procedure€followed€by€the€probate€court€inÏdetermining€the€elective€share,€but€insists€that€the€electiveÏshare€reduced€by€one„third€of€the€secured€debts€is€the€maximumÏamount€that€qualifies€for€the€marital€deduction.€€ÌÌÌÌà@ àòòò òTHE€ANALYSISó óóóÌÌà àThe€first€question€to€be€decided€is€where€the€CourtÏshould€begin€its€inquiry.€€Should€the€Court€review€thoseÏissues€which€may€affect€the€ultimate€decision€even€though€theyÏare€not€disputed€by€the€parties?€€Specifically,€should€theÏCourt€review€the€procedure€for€determining€and€funding€theÏsurviving€spouse's€elective€share,€or€can€the€Court€assume,€asÏthe€parties€insist,€that€determining€and€funding€the€electiveÍshare€are€not€issues€in€this€case?€€Both€the€Commissioner€andÏthe€executrix€would€have€the€Court€focus€only€on€one€narrowÏissue€„€whether€the€surviving€spouse's€elective€share,€asÏcalculated€by€the€probate€court,€must€be€reduced€by€one„thirdÏof€the€amount€of€the€secured€debts€in€determining€the€maximumÏallowable€marital€deduction.€€That€is€the€only€issue€which€wasÏraised€in€the€Court€of€Appeals€and€the€only€issue€which€hasÏbeen€briefed€and€argued€in€this€Court.€€When€questioned€atÏoral€argument€before€this€Court,€counsel€for€both€theÏCommissioner€and€the€executrix€insisted€that€the€procedure€forÏdetermining€the€elective€share€is€not€an€issue.€€They€insistÏthat€this€is€a€tax€case€only€and€that€only€a€single€issue€ofÏlaw€is€presented.€€The€Commissioner€in€his€brief€states,Ì€ÌÓÓà8 àThis€is€a€Tennessee€inheritance€tax€case.€ÏIt€is€neither€a€debtor„creditor€disputeÏnor€a€priorities€spat€among€creditors.€ÏIt€is€not€a€probate€proceeding€or€anÏappeal€from€probate€court.€€It€is€a€stateÏinheritance€tax€case.ÌÌÌÌAnd€further,ÌÌÌÌà8 àThe€Commissioner€does€not€contest€andÍwould€not€disturb€the€elective€shareÏactually€awarded€to€the€widow€by€theÏProbate€Court.€€As€the€Court€of€AppealsÏrecognized,€in€this€case€"no€issue€isÏtaken€with€the€calculation€of€theÏelective€share,€but€only€with€how€much€ofÏthat€share€qualifies€as€a€maritalÏdeduction€for€determining€inheritance€taxÏliability."ÌÌ€€Ì€ÌÓÓà àThe€appeal€in€this€case€is€not€from€the€probateÏcourt€where€the€elective€share€was€determined€and€funded€butÏfrom€the€chancery€court,€where€the€executrix€filed€suit€forÏthe€recovery€of€taxes€paid.€€The€executrix€alleged€as€theÏbasis€for€relief€that€the€Commissioner€erroneously€reduced€herÏelective€share€by€one„third€of€the€decedent's€secured€debts€inÏdetermining€the€allowable€marital€deduction.€€Records€of€theÏprobate€proceedings,€which€were€made€a€part€of€the€record€inÏthis€case,€do€not€reflect€any€adversary€proceedings€in€thatÏcourt.€€It€appears€that€in€this€estate€the€only€controvertedÏissue€has€been€the€amount€of€death€taxes€due,€and,€then,€onlyÏone€issue€has€been€presented.€€The€history€of€the€proceedingsÏis€well€summarized€by€this€additional€statement€taken€from€theÏCommissioner's€brief:ÌÓÓÌÌà8 à€€€€€Determination€of€the€maritalÏdeduction€for€tax€purposes€does€notÏaffect€or€determine€how€much€the€securedÏcreditors€get,€how€much€the€spouse€takes,Ïhow€much€unsecured€creditors€are€paid,€orÏthe€order€in€which€claims€are€addressed.€ÏSuch€matters€are€to€be€worked€out,€orÏthrashed€out,€among€the€creditors,€theÏspouse,€and€other€beneficiaries€andÏclaimants.€€Just€as€the€Probate€Court€wasÏnot€concerned€with€the€calculation€of€theÏmarital€deduction,€and€thus€neverÏaddressed€the€issue€presented€by€thisÏcase,€the€Commissioner€here€is€notÏconcerned€with€the€distributions€out€ofÏthe€decedent's€estate.ÌÌÌÌÓÓà àThough€not€presented€by€the€parties€as€issues€inÏthis€case,€there€are€implicit€in€the€parties'€agreementÏapproving€the€determination€and€funding€of€the€survivingÏspouse's€elective€share€significant€legal€issues€which€haveÏnot€been€judicially€resolved.€€Those€issues€include€theÏconstruction€and€interpretation€of€Tenn.€Code€Ann.€ðð€30„2„305Ï(1984)€("[e]very€debtor's€property,€except€such€as€may€beÏspecifically€exempt€by€law,€is€assets€for€the€satisfaction€ofÏall€his€just€debts");€Tenn.€Code€Ann.€ðð€67„8„304€(1994)Ï(transfers€of€property€by€will€or€statutes€regulating€dissentÏand€distribution€are€taxable);€Tenn.€Code€Ann.€ðð€67„8„315Ï(1994)€(determination€of€the€"net€estate€subject€to€tax");ÍTenn.€Code€Ann.€ðð€31„4„101€(definitions€of€"elective€share"Ïand€"net€estate");€and€Tenn.€Code€Ann.€ðð€31„4„102€(the€fundingÏof€the€elective€share).€€These€statutes,€as€well€as€others,Ïaffect€significantly€the€competing€interests€of€dissentingÏspouses,€other€estate€beneficiaries,€secured€creditors€andÏunsecured€creditors;€they€also€determine€the€amount€of€andÏliability€for€inheritance€taxes.€€The€Court's€acquiescenceÏwith€regard€to€such€issues€would€resolve€important€questionsÏof€law€which€the€parties€in€this€case€have€not€raised€andÏwhich€have€not€been€litigated€previously.€€Consequently,€theÏCourt€must€undertake€to€review€and€decide€these€several€issuesÏor€limit€this€opinion€to€the€narrow€issue€developed€by€theÏparties.ÌÌà àWithout€the€benefit€of€an€adversarial€proceeding€inÏwhich€counsel€assert€and€support€the€competing€claims,€theÏCourt€elects€to€forego€a€comprehensive€consideration€of€theÏprocedures€for€determining€and€funding€a€surviving€spouse'sÏelective€share€and€the€resulting€consequences€to€affectedÏparties.€€Consequently,€this€decision€is€no€authority€for€theÍresolution€of€those€issues€pretermitted.× ƒ5 ××  ×€€The€result€is€thatÏthis€decision€is€limited€to€the€single€issue:€€òòassumingóó€thatÏan€elective€share€has€been€determined€and€funded€according€toÏlaw,€does€the€entire€elective€share€qualify€for€theÏinheritance€tax€marital€deduction?€€The€answer€is€„€the€entireÏelective€share,€properly€determined,€qualifies€for€the€maritalÏdeduction.€€ÌÌà àThe€Commissioner€relies€upon€Tenn.€Code€Ann.€ðð€31„4„101€(Supp.€1996)€for€the€position€that€the€maximum€maritalÏdeduction€is€the€elective€share€reduced€by€one„third€of€theÏdecedent's€secured€debts.€€Resolution€of€this€issue€must€beginÏwith€consideration€of€Tenn.€Code€Ann.€ðð€67„8„315(a)€which€setsÏforth€the€maximum€allowable€marital€deduction:ÌÌÓÓà8 à€€€€€For€the€purpose€of€determining€theÏnet€estate€subject€to€tax,€the€followingÏdeductions€shall€be€deducted€from€theÍvalue€of€the€gross€estate;€...€.ÌÌà8 à€€€€€.€.€..ÌÌà8 à€€€€€(6)€€An€amount€equal€to€the€value€ofÏany€interest€in€property€which€passes€orÏhas€passed€from€the€decedent€to€theÏsurviving€spouse,€but€only€to€the€extentÏthat€such€interest€is€included€inÏdetermining€the€value€of€the€grossÏestate.€€In€determining€the€amountÏqualifying€for€the€deduction€under€thisÏsubdivision,€the€limitations,Ïrestrictions,€definitions,€elections€andÏrequirements€set€out€in€ðð€2056(b)€and€(c)Ïof€the€Internal€Revenue€Code€(26€U.S.C.€ððÏ2056(b)€and€(c))€shall€be€applicable€toÏthe€deduction€allowed€by€this€subsection;Ïprovided,€that€the€election€specified€byÏðð€2056(b)(7)€of€the€Internal€Revenue€CodeÏ(26€U.S.C.€ðð€2056(b)(7))€must€be€made€toÏthe€department.ÌÌÌÌÓÓSince€all€the€property€included€in€the€spouse's€elective€shareÏin€this€case,€corporate€stock€and€cash,€is€included€inÏdetermining€the€gross€estate,€the€first€limitation€stated€doesÏnot€reduce€the€amount€that€qualifies€for€the€maritalÏdeduction.ÌÌà àThe€Commissioner€insists€that€the€second€limitationÏon€the€deduction€referenced€in€Tenn.€Code€Ann.€ðð€67„8„315(a)(6),€the€"limitations,€restrictions,€definitions,Íelections€and€requirements"€of€26€U.S.C.€2056(b)€and€(c),Ïrequire€that€the€amount€of€the€elective€share€be€reducedÏbecause€that€share€is€subject€to€one„third€of€the€decedent'sÏsecured€debts.€€The€Commissioner€bases€that€argument€on€hisÏinterpretation€of€Tenn.€Code€Ann.€ðð€31„4„101€(Supp.€1996),Ïwhich€states:ÌÌÓÓà8 àò òRight€to€elective€share.„„ó ó(a)€AÏdecedent's€surviving€spouse€has€the€rightÏto€elect€to€take€an€elective€share.€€TheÏelective€share€is€one€third€(l/3)€of€theÏdecedent's€net€estate€as€defined€inÏsubsection€(b).€€The€right€to€elect€anÏelective€share€is€available€to€theÏsurviving€spouse€of€an€intestate€decedentÏand€a€testate€decedent€if€the€survivingÏspouse€elects€against€the€decedent'sÏwill.€€When€the€elective€share€isÏdetermined,€it€is€exempt€from€theÏunsecured€debts€of€the€decedent€incurredÏafter€April1,€1977.€€In€determining€theÏelective€share,€it€is€not€reduced€by€anyÏestate€or€inheritance€taxes.ÌÌà8 à€€€€€(b)€The€net€estate€includes€all€ofÏthe€decedent's€real€and€personal€propertyÏsubject€to€disposition€under€the€terms€ofÏthe€decedent's€will€or€the€laws€ofÏintestate€succession€reduced€by€funeralÏand€administration€expenses,€homestead,Ïexemptions€and€year's€support.ÌÌÌÌÓÓThe€Commissioner€does€not€suggest€that€express€authority€forÍhis€position€is€found€in€this€statute,€but€contends€that€theÏabsence€of€any€mention€of€debts€in€subsection€(b)€and€theÏprovision€in€subsection€(a)€that,€"when€the€elective€share€isÏdetermined,€it€is€exempt€from€the€unsecured€debts€of€theÏdecedent€incurred€after€April1,€1977,"€require€the€conclusionÏthat€the€elective€share,€once€determined,€is€to€be€reduced€byÏsecured€debts.€€The€answer€to€this€proposition€is€that€theÏlanguage€of€that€code€section€simply€cannot€be€reasonablyÏconstrued€to€include€that€meaning.€€That€section€means€what€itÏsays,€the€property€with€which€the€elective€share€is€funded€isÏexempt€from,€that€is,€not€subject€to€execution€for,€theÏdebtor's€unsecured€debts.€€Tenn.€Code€Ann.€ðð€30„2„305€(1984)Ïprovides€as€follows:ÌÌÓÓà8 àò òDebts€chargeable€against€allÏassets.„„ó óEvery€debtor's€property,€exceptÏsuch€as€may€be€specially€exempt€by€law,Ïis€assets€for€the€satisfaction€of€all€hisÏjust€debts.ÌÌÓÓÌ"Exempt€property"€is€property€which€has€been€removed€from€theÏgeneral€provision€of€Section€30„2„305€and€converted€intoÏproperty€which,€in€the€language€of€that€statute,€is€"such€asÍmay€be€specially€exempt€by€law."€€The€Commissioner€findsÏsignificance€in€the€exemption€of€the€elective€share€fromÏunsecured€debts€but€not€secured€debts€in€Section€31„4„101(a).€ÏProperty€subject€to€secured€debts€is€no€longer€declaredÏexempt,€(unlike€the€prior€statute× ƒ6 ××  ×)€because€encumbrances€on€aÏdecedent's€property€cannot€be€discharged€by€being€chosen€toÏfund€an€elective€share.€€Such€a€discharge€would€impair€theÏobligation€of€a€contract€in€violation€of€the€constitution.× ƒ7 ××  ×€ÏHowever,€if€property€subject€to€the€decedent's€secured€debtsÏis€included€in€the€elective€share,€as€it€may€be,× ƒ8 ××  ×€only€theÏvalue€of€the€property€in€excess€of€the€debt€secured€would€beÏincluded€in€determining€the€value€of€the€elective€share€andÏalso€the€marital€deduction.€€The€federal€statute,€26€U.S.C.Ï2056(b)(4)€(Supp.€1996),€does€not€require€that€the€electiveÏshare€taken€by€the€spouse€be€reduced€where€secured€debtsÏexist.€€That€section€requires€that€in€determining€the€amountÍof€the€marital€deduction,€the€value€of€any€interest€passing€toÏthe€surviving€spouse€be€reduced€by€the€amount€of€anyÏencumbrance€on€such€property.€€Treasury€Regulation€20.2056(b)„4(b)€(1995)€provides€in€pertinent€part:ÌÌÓÓà8 àIf€a€property€interest€passed€from€theÏdecedent€to€his€surviving€spouse€subjectÏto€a€mortgage€or€other€encumbrance€...Ï[for€marital€deduction€purposes]€theÏvalue€of€the€property€interest€is€to€beÏreduced€by€the€amount€of€the€...Ïencumbrance....€€However,€if€under€theÏterms€of€the€decedent's€will€or€underÏlocal€law€the€executor€is€required€toÏdischarge,€out€of€other€assets€of€theÏdecedent's€estate,€a€mortgage€or€otherÏencumbrance€on€property€passing€from€theÏdecedent€to€his€surviving€spouse,€or€isÏrequired€to€reimburse€the€survivingÏspouse€for€the€amount€of€the€mortgage€orÏother€encumbrance,€the€payment€orÏreimbursement€constitutes€an€additionalÏinterest€passing€to€the€surviving€spouse.ÌÌÌÌÓÓThat€additional€interest€would€constitute€a€portion€of€theÏelective€share€and€also€the€allowable€marital€deduction.€€œÌÌà àNeither›€state€nor€federal€law€requires€that€theÏelective€share€be€reduced€as€claimed€by€the€commissioner.ÌÌÌÌà@ àòòò òTHE€CONCLUSIONóóó óÌÌà àThe€conclusion€is€that,€assuming€that€the€electiveÏshare€was€determined€and€funded€according€to€law,€which€is€notÏdecided€in€this€case,€the€property€constituting€the€electiveÏshare€passed€from€the€decedent€to€the€surviving€spouse,€andÏ"an€amount€equal€to"€the€full€value€of€the€elective€shareÏqualifies€for€the€marital€deduction€under€Tenn.€Code€Ann.€ððÏ67„8„315(a)(6).€€€ÌÌà àThe€judgment€of€the€Court€of€Appeals€is€set€aside,Ïand€the€judgment€of€the€trial€court€is€affirmed.€€The€case€isÏremanded.ÌÌà àCosts€are€taxed€to€the€Commissioner.ÌÌÓÓà àà àà àà àà à_________________________Ìà àà àà àà àà àReid,€J.ÌÌÌConcur:ÌÌBirch,€C.J.,€Drowota€andÌ€€€Anderson,€JJ.€