Trust Beneficiary as Owner for Income Tax Purposes

Jonathan G. Blattmachr (retired partner, Milbank, Tweed, Hadley & McCloy LLP), Mitchell M. Gans (professor of law, Hofstra University), & Alvina H. Lo have published their article entitled A Beneficiary as Trust Owner: Decoding Section 678, 35 Am. C of Trust and Estate Counsel J. 106 (2009).

A synopsis of the article is below:

This article explores under what circumstances a person who did not actually contribute property to a trust can be considered its “owner” for income tax purposes.  In particular, the article undertakes a detailed examination of whether a non-grantor holding a power to distribute trust property to himself or herself, subject to an “ascertainable standard,” is properly treated as the trust’s owner for income tax purposes and the extent to which a non-grantor who held an unrestricted power of withdrawal that has lapsed may continue to be treated, for income tax purposes, as the owner of the portion of the trust with respect to which the power lapsed.