Tuesday, September 25, 2012

With guest co-blogger, Washington University School of Law student, Anne Jump.

The IRS recently released Private Letter Ruling 201233008 (the “PLR”), in which the IRS ruled that a proposed partial termination and modification of a trust pursuant to state law will not (1) cause the trust to be includible in the grantor’s estate under Internal Revenue Code sections 2036 or 2038, (2) result in a transfer by settlor of trust assets pursuant to Code section 2501, and (3) will not cause the trust to lose its exempt status for purposes of chapter 13 of the Code.

The Uniform Trust Code (UTC) provides that an irrevocable noncharitable inter vivos trust may be modified or terminated upon consent of the settlor and all of the beneficiaries. U.T.C. § 411(a). From the facts set forth in the PLR, the proposed partial termination and modification of the trust at issue was likely being made pursuant to a state law version of this section of the UTC.

Pursuant to state statute, the parties proposed to terminate a portion of the Trust, which portion would be distributed outright to the current beneficiaries. The remainder of the Trust would continue to be held in trust for the same period of time as the initial trust, but would provide for mandatory distributions of income to the same beneficiaries. (more…)

Monday, September 24, 2012

As we told you last week, the IRS recently released Draft Instructions for Form 706 for decedents dying in 2012, which can be found here. If you don’t feel like reading all 52 pages yourself, here are some of the highlights:

• The new Form 706 includes a new Part 6—Portability of Deceased Spousal Unused Exclusion (DSUE). This new Part 6 allows the taxpayer to (1) opt out of electing to transfer the decedent’s DSUE to his or her surviving spouse, (2) calculate the amount of DSUE that can be transferred to the surviving spouse if so elected, and/or (3) account for any DSUE amount received by the decedent from his or her predeceased spouse. (more…)

Thursday, September 20, 2012

The IRS has released Draft Instructions for Form 706 for the estates of decedents dying in 2012.

Just as we cautioned when we announced the IRS Release of the Draft 706, it is important to note the caution at the beginning of the draft:

“This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information as a courtesy.  Do not file draft forms.  Also, do not rely on draft instructions and publications for filing.”

Tuesday, September 11, 2012

The 7520 rate for September 2012 has stayed the same as August at 1.0%.

The September 2012 Applicable Federal Rates can be found here.