IRS Ruling on Substantial Compliance for Allocation of GST Exemption

The IRS has issued a PLR stating that a personal representative of an estate substantially complied with section 2632(a) when allocating a decedent’s remaining GST exemption.  When filing Form 706, the representative made math errors when allocating GST exemption to three pecuniary bequests to skip persons in the will, and did not enter a planned GST-exempt trust into Part 1, Line 9 of Schedule R.  However, the IRS found evidence to suggest that the representative intended to bring the inclusion ratio of the pecuniary bequests down to zero.  Furthermore, there was sufficient evidence on the return and in the trust instrument of the representative’s intent to make a GST exemption allocation to the trust.  Thus, substantial compliance with section 2632(a) under section 2642(g)(1) was evident and the automatic allocations did not apply.

See “Estate Substantially Complied with GST Exemption Allocation Requirements,” Tax Analysts, 2014 TNT 110-49 (June 9, 2014)

Posted by David Staggs, Associate Editor, Wealth Strategies Journal