Jason Kleinman, Herrick, Feinstein LLP, has made available for download his article, “Trust Decanting: A Sale Without Gain Realization,” which was published in the Real Property, Probate and Trust Law Journal, Vol. 49, Winter 2015.  The Abstract is as follows:

This Article describes why decanting or modifying a trust cannot be a taxable event for trust beneficiaries. The Internal Revenue Service and trust law practitioners appear to assume the contrary and focus on determining which such events are taxable. Their perspective takes for granted that a property’s material modification gives rise to its deemed sale for tax purposes. This premise should not hold true for trusts, because a tax on gain requires the identification of an owner to derive the gain and trusts are not owned by any person. The perspective advanced in this Article should provide practitioners with a freer hand to undertake trust decantings and clarify the common law for determining when property modifications are taxable.

Download full article at: Trust Decanting: A Sale Without Gain Realization by Jason Kleinman :: SSRN

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.