Private Trust Companies

The IRS has recently released Notice 2008-63 which solicits comments on a proposed revenue ruling on the income and transfer tax consequences of family members creating a private trust company to serve as the trustee of trusts in which family members are the settlors and beneficiaries.  The Notice explains:

The IRS and the Treasury Department intend that the revenue ruling, once issued, will confirm certain tax consequences of the use of a private trust company that are not more restrictive than the consequences that could have been achieved by a taxpayer directly, but without permitting a taxpayer to achieve tax consequences through the use of a private trust company that could not have been achieved had the taxpayer acted directly. Comments are specifically requested as to whether or not the draft revenue ruling will achieve that intended result.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this ruling to my attention.