Internal Revenue Rulings
 Transfer for value of a life insurance policy from one grantor trust to another did not violate the transfer for value rule because all assets in both trusts were deemed owned by the same person.
Therefore the transfer has no affect on the application of § 101(a)(1) regarding amounts the beneficiaries of the policies will receive upon the death of taxpayer.
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Final Regulations on Electing Out of Automatic Allocation of GST Exemption (TD 9208, issuing Reg §26.2632-1(b).
The regulations address:
(1) The §2632(c)(5)(A)(i) election to not have the §2632(c)(1) deemed allocation of unused generation-skipping transfer (GST) tax exemption apply to certain transfers to a §2632(c)(3)(B) GST trust; and
(2) The election under §2632(c)(5)(A)(ii) to treat a trust as a GST trust for electing out of automatic allocation of unused generation-skipping transfer (GST) tax exemption to certain transfers to GST trusts.
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Family-owned trust company (“Trust Company”) that owned a number of trusts created by its founder determined to be sufficiently free from control by its founder and/or the beneficiaries of the trusts to permit it to serve as trustee of the trusts.
The governing trust instruments all preclude founder and the beneficiaries from directly participating in decisions regarding discretionary distributions from the trusts. Furthermore, under the Trust Company Articles of Incorporation no more than half of the directors may be related or subordinate to Patriarch.
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Temporary regulations issued under section 408A of the Code provide guidance concerning the tax consequences of converting a non-Roth IRA annuity to a Roth IRA. These regulations affect individuals establishing Roth IRAs, beneficiaries under Roth IRAs, and trustees, custodians and issuers of Roth IRAs.
The temporary regulations clarify that clarify that when a non-Roth individual retirement annuity is converted to a Roth IRA, the amount that is treated as distributed is the fair market value of the annuity contract on the date the annuity contract is converted.
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Final regulations issued under section 402(a) regarding the amount includible in a distributee's income when life insurance contracts are distributed by a qualified retirement plan, and how property sold by a qualified retirement plan to a plan participant or beneficiary for less than fair market value will be treated.
The IRS and Treasury concluded that the safe harbor formulas in Rev. Proc. 2004-16 did not function well for certain types of traditional policies, and also should be revised to reflect a discount for the possibility that a surrender charge would apply in certain situations. Accordingly, Rev. Proc. 2005-25, 2005-17 I.R.B. 962, was issued to modify and supersede Rev. Proc. 2004-16 in order to make adjustments to the safe harbor formulas.
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Service issues new Sample CRUT Forms.
The following link leads to an excellent discussion of the pros & cons of the new forms.
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Assignment of Future Lawsuit Proceeds to Trust Is Completed Gift .
Taxpayer proposed to assign a portion of the potential proceeds from a wrongful death action to Trust. Trust is irrevocable and the provisions may be amended only under very limited circumstances. The trust instrument may not be modified in any manner that would alter the interest of any beneficiary. In addition, under the terms of Trust, Taxpayer is expressly prohibited from serving as a trustee.
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