Trust Retains GST Tax-Exempt Status After Conversion

In IRS Letter Ruling 201516028, an irrevocable trust that was grandfathered into tax-exempt status for the generation-skipping transfer (GST) tax, was ruled to have retained that status after it was converted from an income-only trust to a total return unitrust. The conversion was made pursuant to state law. The compliance with state statutes also avoided income and gift tax consequences for the switch.

See Wolters Kluwer Law & Business, GST-Exempt Status Not Altered by Conversion, Resourcefullaw.com, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.