IRS Rules on Tax Consequences of a Court-Ordered Settlement Agreement for Parties to a Trust

On January 28, 2011, the IRS ruled in LTR 201121002 that a court-approved settlement agreement among the parties of a trust will not cause the trust to fall under the auspices of the General Skipping Transfer Tax (Section 2601 of the Estate Tax Code).  Additionally, the IRS ruled that it would likewise not be considered a gift under Section 2501 of the Code.

Hat Tip: Tax Analysts

Posted by Jessica Rebarber, Associate Editor, Wealth Strategies Journal