PLR Reinvigorates Incomplete Gift Non-Grantor Trusts

Recently, a Private Letter Ruling hasallowed taxpayers to reduce state tax liability without compromising thebenefits from their assets. Taxpayers receiving stable income from their stockportfolio or with unrealized capital gains can take full advantage of thisPrivate Letter Ruling (PLR).

PLR 201310002 holds that the incomplete gift non-grantor trusts with a lifetimespecial power of appointment for a heath, education, maintenance, andsupport purpose is now permitted. In essence, the trust makes a transferincomplete in two ways; through the remainder interest and the majorinterest without the hassle of the grantor trust status. Additionally, theruling held the distribution committee does not have powers of appointment. Asa result, the PLR should make using incompletegift non- grantor trusts more useful to avoid state income tax forthe upper middle class. The preferred jurisdiction to create these trusts isNevada.

See Peter Meicherand Steven J. Oshins, New Private Letter Ruling Breathes Life Into NevadaIncomplete Gift Non-Grantor Trusts, Wealthmanagment.com, Apr.16, 2013.

Special thanks toJim Hillhouse (Professional Legal Marketing (PLM, Inc.)) forbringing this article to my attention.