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IRS Proposes Private Trust Firm Ruling

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Internal Revenue Service officials have come out with a draft of a document that could affect how well trust arrangements will protect families’ estates.

IRS officials have published the proposed revenue ruling in IRS Notice 2008-63, which concerns transfers with a retained life estate.

The ruling focuses on a family that creates a private trust company to serve as the trustee of trusts having family members as grantors and beneficiaries.

Officials discuss use of private trust companies by 3-generation families in states that have and have not created private trust company statutes.

In the situations described in the proposed ruling, use of a private trust company as the trustee of a family trust would not cause the value of the trust assets to be included in a grantor’s gross estate, officials write in the draft.

Officials ask for comments about whether additional guidance is necessary for situations involving trust assets that include stock in a controlled corporation or life insurance arrangement.

Comments are due Nov. 4.


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