PLR 201006012: Modification to Trust Not Subject to Section 2702

In PLR 201006012, the IRS examined a modification to a trust that was intended to qualify as a qualified personal residence trust is not subject to Section 2702.  The IRS determined that if the modification of the trust is substantially similar to the modification of the trust in the sample qualified personal residence trust provisions of Rev. Proc. 2003-42, the trust operates consistently with the terms of the trust instrument, and if the residence qualifies as a personal residenc under the definition, in Section 25.2702-5(c)(2), of "personal residence,"  the trust is a valid trust under local law, Section 2702 will not apply to it. 

See also IRS Addresses Gift Tax Consequences of Proposed Trust Modification, 2010 TNT 34-56 (February 22, 2010).