Are restricted management accounts entitled to discounts?

Jim Roberts (Attorney, Glast, Phillips & Murray, P.C., Dallas, TX) has written an article entitled No Discounts for RMAs.

Here is a summary of his article:

Restricted Management Accounts, or RMAs, are considered by many to be a simple, yet effective, means of discounting assets, particularly, stocks and cash, without the need for complex limited partnerships agreements or split-ownership planning. A parent might deposit stocks and bonds into an RMA for a fixed term, perhaps five years. By agreement, the institution, whether a bank or brokerage company, manages the account. It has discretion over the investments, while the person who established the account retains only a property interest in the assets. The RMA cannot be canceled, but the person who set up the account can transfer, with the consent of the institution, the rights of the creator of the account to a family member, a trust, or other permitted transferee. Typically, parents have used RMAs, funding them and then gifting interests in them to children.

While certain commentators earnestly believe that RMA discounts are viable and, if litigated, would be upheld, nonetheless, the Internal Revenue Service has ruled in Rev. Rul. 2008-35, 2008-29 IRB116, that an interest in an RMA is to be valued for transfer tax purposes without any reduction or discount on account of the restrictions imposed by the RMA agreement.