1201010 Informal Interpretation

Date:
Rule:
802.71
Staff:
Michael Verne
Response/Comments:

  – Agree on both. K Walsh concurs.

Question

From: (Redacted)
Sent: Tuesday, January 24, 2012 12:57 AM
To: Verne, B. Michael
Cc: (Redacted)
Subject: Questions re Trusts

Mike,

Can you help me with twoquestions about trusts?

1. Trusts A and B are each theirown UPE. They are irrevocable, the settlor has not retained a reversionaryinterest, and no one has the right to remove and replace 50% of more of thetrustees. The trustees of A and B, in their capacities as such, jointly createa new irrevocable Trust C (and are identified in the trust document as thesettlors of Trust C) for the same beneficiary, and transfer all the assets of Aand B to C. Trust C (unlike A and B) is controlled by the beneficiary, who hasthe right to remove and replace the trustees. We believe this is exempt under802.71 as a transfer by a settlor to an irrevocable trust -do you agree?

2. Trust X is its own UPE. It isirrevocable, the settlor has not retained a reversionary interest, and no onehas the right to remove and replace 50% or more of the trustees. The settlor ofTrust X creates a new Trust Z (which he controls by virtue of the right toremove and replace the trustees), with the same beneficiaries as Trust X. Inresponse to the request of the settlor, the trustees of Trust X transfer allthe trust assets to Trust Z pursuant to authority they have under state law totransfer trust property to another trust for the benefit of the samebeneficiaries with the consent of the beneficiaries. No consideration is givenfor this transfer. We believe this is also exempt under 802.71 as either agift, or a transfer by a settlor to an irrevocable trust -do you agree?

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.