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. (Ltr Rul 200523003).

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. Discretionary distribution decisions are made by a Distribution Committee of the Board of Directors. They also require that the Trust Company's board of directors contain a majority of independent directors and precluded the founder's participation in distribution decisions. Similar restrictions were in each of the trusts owned by the Trust.

Given these restrictions, the Service ruled that the Company was not “related or subordinate” to Company's founder and could act as trustee without causing the founder or the descendant beneficiaries to be treated as owner of the trusts.

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