In PLR 201540006 the IRS ruled that one spouse’s disclaimer of the right to trust distributions as the beneficiary’s spouse will be treated as made within a reasonable time and will not constitute a taxable gift if the disclaimer is made within nine month’s of the spouse’s marriage date. In addition, certain provisions in a second trust that reference the disclaimer will not constitute consideration. Specifically, PLR 201540006 makes the following rulings:
Accordingly, based on the facts submitted and representations made, we conclude that Taxpayer’s disclaimer of Taxpayer’s entire beneficial interest in Trust 1 within nine months following the marriage date will be deemed to be made within a reasonable time after knowledge of the existence of the transfer for purposes of section 25.2511-1(c)(2). Moreover, we conclude that Taxpayer’s disclaimer of Taxpayer’s entire beneficial interest in Trust 1 within nine months following the marriage will not constitute a taxable gift under section 2501. Further, we conclude that the provisions in Trust 2 terminating Taxpayer’s beneficial interest in such trust in the event Taxpayer does not disclaim Taxpayer’s interest in Trust 1, do not constitute consideration in return for making the disclaimer or otherwise constitute the acceptance of ownership of the interest in Trust 1.
Read the full PLR at PLR 201540006.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.