Rev. Rul. 81-51
Caution: Revoked by 95-58
Internal Revenue Service
Revenue Ruling
TRANSFERS; TRUST; POWER TO APPOINT SUCCESSOR TRUSTEE
Published: February 17, 1981
26 CFR 20.2036-1: Transfers with retained life estate
(Also Sections 2038, 7805; 20.2038-1, 301.7805-1.)
Transfers; trust; power to appoint successor trustee. Rev. Rul. 79-353, which holds that the value of property transferred to a trust is includible in the decedent-grantor's gross estate under sections 2036(a)(2) and 2038(a)(1) of the Code if the grantor retains the power to replace the trustee, will not be applied to a transfer or to an addition to a trust made before October 29, 1979, if the trust was irrevocable on October 28, 1979. Rev. Rul. 79-353 modified.
Rev. Rul. 79-353, 1979-2 C.B. 325, holds that the value of property transferred to a trust is includible in the decedent-grantor's gross estate under section 2036(a)(2) and section 2038(a)(1) of the Internal Revenue Code when the grantor retained the power to remove the corporate trustee, without cause, and appoint another corporate trustee, and the trustee is endowed with broad discretionary powers.
Further consideration has been given to Rev. Rul. 79-353, and it has been determined that, under the authority contained in section 7805(b) of the Code, the holding of Rev. Rul. 79-353 described above will not be applied to a transfer or to an addition to a trust, made before October 29, 1979, the date of publication of the revenue ruling, if the trust was irrevocable on October 28, 1979.
Accordingly, if on or before October 28, 1979, a grantor transferred property to an irrevocable trust, retaining the power to remove, at will, and replace the corporate trustee with another corporate trustee, no estate tax consequences will result on account of the retained removal and replacement power.
EFFECT ON OTHER REVENUE RULINGS
Rev. Rul. 79-353, 1979-2 C.B. 325, is modified.
Rev. Rul. 81-51, 1981-1 C.B. 458, 1981-7 I.R.B. 15.