Power to appoint successor trustee does not subject trust property to estate tax - again.In Rev. Rul. 95-58, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. has revoked two prior revenue rulings and modified a third as a result of recent court decisions on the right of a grantor An individual who conveys or transfers ownership of property. In real property law, an individual who sells land is known as the grantor. grantor n. to remove a trustee and appoint a new one. Under Rev. Rul. 95-58, the value of a trust is not includible in the grantor's estate, due to the reserved right to remove the trustee and appoint a successor trustee not related or subordinated to the grantor. Generally, Sec. 2036 provides for the inclusion in a decedent's gross estate of the value of property that had been transferred at any time and in which the decedent An individual who has died. The term literally means "one who is dying," but it is commonly used in the law to denote one who has died, particularly someone who has recently passed away. retained the right to its income or the right to designate des·ig·nate tr.v. des·ig·nat·ed, des·ig·nat·ing, des·ig·nates 1. To indicate or specify; point out. 2. To give a name or title to; characterize. 3. who shall enjoy the property or its income. Similarly, Sec. 2038 provides for inclusion if the decedent held a power to change the enjoyment The exercise of a right; the possession and fruition of a right or privilege. Comfort, consolation, contentment, ease, happiness, pleasure, and satisfaction. Such includes the beneficial use, interest, and purpose to which property may be put, and implies right to profits and income of the property through the exercise of a power to alter, amend, revoke To annul or make void by recalling or taking back; to cancel, rescind, repeal, or reverse. revoke v. to annul or cancel an act, particularly a statement, document, or promise, as if it no longer existed. or terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. . The Service has shown concern that, when a trustee has broad discretionary powers to distribute income and effect beneficial enjoyment of trust property, the trustee's control is effective control of trust income and property. To the extent a grantor of a trust can exercise such control, that trust may be includible in a grantor-decedent's gross estate. In 1977, the IRS issued Rev. Rul. 77-182 in which it concluded that a power to appoint a successor corporate trustee only in the event of the resignation or removal by judicial process of the original trustee did not amount to a power to remove the original trustee and, therefore, did not endow en·dow tr.v. en·dowed, en·dow·ing, en·dows 1. To provide with property, income, or a source of income. 2. a. the decedent with control over trust income. A different position was taken in 1979 in a situation in which the grantor could remove a trustee. In Rev. Rul. 79-353, the Service ruled that the reservation by a decedent-settler of the unrestricted power to remove a corporate trustee and appoint a successor corporate trustee is equivalent to the reservation of the trustee powers by the settler. (The logic is that the settler could appoint a trustee that would follow the settler's wishes.) This ruling was modified by Rev. Rul. 81-51, in which the conclusions of Rev. Rul. 79-353 were held to be prospective for trusts created after Oct. 28, 1979. As a result of two recent decisions, Est. of Wall, 101 TC 300 (1993), and Est. of Vak, 973 F2d 1409 (8th Cir. 1992), rev'g TC Memo 1991-503, the IRS has revoked Rev. Ruls. 79-353 and 81-51 and issued Rev. Rul. 95-58. Under Rev. Rul. 95-5 1 the power to remove the t appoint an individual or corporate successor trustee not related to the decedent is not considered discretionary control over trust income. |
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