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View Full Version : New Citizenship creates a Inter Vivos trust.



motla68
08-29-11, 03:45 AM
" inter vivos " means; between the living.

http://en.wikipedia.org/wiki/Inter_vivos

D = decedant

FACTS
In Year 1, D, a United States citizen,
established and funded Trust. Trust is an
irrevocable inter vivos trust for the ben-
efit of D’s descendants. T is the trustee
of Trust, and D is prohibited from serving
as trustee under the terms of Trust. The
governing instrument provides that D has
the power, exercisable at any time, to ac-
quire any property held in Trust by substi-
tuting other property of equivalent value.

http://www.irs.gov/pub/irs-irbs/irb08-16.pdf

What other trust could have been created, show some artifiacts?

David Merrill
08-30-11, 01:57 PM
You did not take that FACTS snippet in context.


Section 2036.—Transfers With Retained Life Estate 26 CFR 20.2036–1: Transfers with retained life estate. (Also § 2038; 20.2038–1.) Substitution power. This ruling provides guidance regarding whether the corpus of an inter vivos trust is includible in the grantor’s gross estate under section 2036 or 2038 of the Code if the grantor retained the power, exercisable in a nonfiduciary capacity, to acquire property held in the trust by substituting other property of equivalent value. The ruling provides that, for estate tax purposes, the substitution power will not, by itself, cause the value of the trust corpus to be includible...




The subject is substitution power for officers over the specific style of trust. You show only a sentence implying that citizens of the US are the cause creating the trust. The trust is of course created by an indenture and applied to citizens of the US in the memorandum. It does not mean, as you imply that when a citizen of the US is created that this particular trust structure is created. The memorandum is for US citizens who have created that kind of a trust, and how they may substitute items in and out of the taxable income purview - items on Schedule A of the trust.

I admit I am not spending much time on it and may have that incorrect. But I just looked at the text above what you have shown us. I am not about to read the entire document when I think you are forcing an interpretation on a tiny passage of it. It would seem to me that you did not read the entire paper too!



Regards,

David Merrill.

allodial
08-30-11, 03:09 PM
Agreed. It appears to be talking about trusts created by U.S. citizens.