2001001 Informal Interpretation

Date:

Tags:

Rule:
801.1
Staff:
Nora Whitehead
Response/Comments:

Agree.

Question

From: Whitehead, Nora


Sent: Tuesday, January 21, 2020 11:29:10 AM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Cc: HSRHelp


Subject: RE: 801.1(b) - Control over a trust and the contractual power "presently" to designate... trustees

Agree.

From: [Redacted]


Sent: Saturday, January 18, 2020 3:27:25 PM (UTC-05:00) Eastern Time (US & Canada)


To: HSRHelp


Subject: 801.1(b) - Control over a trust and the contractual power "presently" to designate... trustees

Hi,

My question is in regards to the definition of Control with respect to a Trust – as found in Rule 801.1(b)(2). Specifically, I am looking for some more guidance on the relevance of the word “presently” in the definition of Control and its applicability to the fact pattern below. The rule provides that Control includes having the contractual power presently to designate 50 percent or more of the trustees of a trust that is irrevocable and/or in which the settlor does not retain a reversionary interest.

Facts: Assume that there is a trust that is irrevocable and the settlor does not retain a reversionary interest. The question is whether the trust is “controlled” by the settlor. The settlor has the contractual power to designate the successor trustee upon the current trustee’s death or resignation. For clarity, the settlor’s ability to name the successor trustee is conditioned and may not be exercised until the current trustee’s death or resignation. The settlor does not have the power to remove the current trustee. It would seem as if the settlor’s contractual power is not presently to designate 50% or more of the trustees. Rather the settlor’s contractual power is to designate 50% or more of the trustees only when a future condition is met.

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.

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