An interesting situation: A state probate court's final and unappealable ruling modifying a testamentary trust so as to qualify as a valid QTIP trust for marital deduction purposes does not preclude a federal court from making an independent determination of the state property laws, as the probate adjudication was not a decision by the state's highest court. Thus, the federal court can hold that the probate court's modification is not valid and that the trust is not a QTIP. Estate of Rapp v. Commissioner, 140 F.3d 1211 (9th Cir. 1998).
Quere: how does this holding mesh with Erie? Does the RDA require deference only to determinations by a state's highest court? Or perhaps more pointedly, do federal courts think they can run rampant when the IRS is a party?
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