Trust transfer is an incomplete gift, while part of the income-tax ruling is deferred

Plain-English summary

A grantor created an irrevocable domestic trust for himself, his descendants, and a foundation. A distribution committee could direct payments, while the grantor retained consent, support-distribution, and testamentary appointment powers. The IRS ruled that the grantor's contribution was an incomplete gift and that committee-directed payments to the grantor were returns of his property, not gifts by committee members. Payments to other beneficiaries would be gifts by the grantor, and the committee members' powers would not be general powers of appointment included in their estates. For income-tax purposes, the IRS found no grantor ownership under sections 673, 674, 676, 677, or 679 while the committee and domestic-trust conditions continued, and no committee-member ownership under section 678. It deferred the factual question whether the grantor's administrative powers would cause ownership under section 675(4).

Ruling snapshot

• Question: How would the trust's retained and shared distribution powers affect grantor-trust status, gift completion, and estate inclusion for committee members?
• Outcome: mixed, the gift-tax and power-of-appointment rulings were favorable, but the section 675(4) income-tax issue was deferred
• Key authorities: IRC §§ 671-679, 2041, 2501, 2511, 2514; Treas. Reg. §§ 1.675-1, 20.2041-3, 25.2511-2, 25.2514-1, 25.2514-3

Full text (IRS public release)

~~~
Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201718008
Release Date: 5/5/2017
Index Number: 671.00-00, 2501.00-00,
2514.00-00, 2041.00-00
Person To Contact:
------------------------------, ID No. ------------
---------
------------------------ Telephone Number:
--------------------------------- ----------------------
-------------------------------------- Refer Reply To:
CC:PSI:B04 – PLR-120842-16
Date: December 20, 2016

     ---------------------------

Legend:

Date = --------------------
Grantor = -------------------------------------------------------
Distribution Committee = -----------------------------------------------------------------------------
----------------------------------------------------------------------------------

Son 1 = -------------------------------------------------------
Son 2 = -------------------------------------------------------
Daughter 1 = ----------------------------------------------------------
Daughter 2 = -------------------------------------------------
Daughter 3 = ---------------------------------------------------
Granddaughter 1 = -----------------------------------------
Granddaughter 2 = ------------------------------------------------------------
Trust = ------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Foundation = --------------------------------------------------------
State = --------------
Trustee = --------------------------------------------------------
Permissible Beneficiaries = ------------------------------------------------------------------------------
-------------------------------------

Dear ------------------:
PLR-120842-16 2

  This letter responds to your authorized representative’s letter of June 28, 2016,

requesting rulings under §§ 671, 2501, 2514, and 2041of the Internal Revenue Code.

   The facts submitted and representations made are as follows. On Date, Grantor

created an irrevocable trust (Trust) for the benefit of himself, his descendants, and
Foundation (Permissible Beneficiaries). A corporate trustee (Trustee) is the sole
trustee. Trust is represented to be a domestic trust sited in State and, pursuant to the
Trust agreement, is governed by the laws of State.

   During Grantor’s lifetime, Trustee must distribute such amounts of net income

and/or principal of Trust to Grantor and the Permissible Beneficiaries as directed by the
Distribution Committee and/or Grantor, as follows:

   (1) Trustee, pursuant to the direction of a majority of the Distribution
       Committee, with the written consent of Grantor, shall distribute to or
       for the benefit of the Permissible Beneficiaries all or any portion of the
       net income and principal of Trust (Grantor’s Consent Power);

   (2) Trustee, pursuant to the direction of all of the Distribution Committee
       members, shall distribute to any Permissible Beneficiaries all or any
       portion of the net income or principal of Trust (Unanimous Member
       Power); and

   (3) At any time, Trustee shall distribute to any of the Permissible
       Beneficiaries, other than Grantor and Foundation, all or any portion of
       the principal of trust as the Grantor directs for the health, education,
       maintenance, or support of the Permissible Beneficiaries (Grantor’s
       Sole Power). Such distribution power shall be exercisable by the
       Grantor in a nonfiduciary capacity. The Distribution Committee may
       appoint income or principal equally or unequally and to or for the
       benefit of any one or more of the Permissible Beneficiaries of Trust to
       the exclusion of others. Any net income not distributed by Trustee
       will be accumulated and added to principal.

   Upon the death of Grantor, Trustee shall distribute the remaining property of

Trust as Grantor appoints in Grantor’s last will in any manner and in favor of any
person, other than Grantor’s estate, the Grantor’s creditors, or the creditors of Grantor’s
estate (Grantor’s Testamentary Power). Any remaining property held in Trust that has
not been effectively appointed by will, shall be distributed to trusts for the benefit of
Grantor’s descendants.

 The Distribution Committee is initially composed of Son 1, Son 2, Daughter 1,

Daughter 2 and Daughter 3. Trust provides that, at all times, at least two adult
PLR-120842-16 3

individuals who are Permissible Beneficiaries, other than Grantor, must be members of
the Distribution Committee. If at any time there are fewer than three adult members
serving on the Distribution Committee, then the vacancy will be filled in the following
order, first by Granddaughter 1 and then by Granddaughter 2. Grantor shall not serve
as a member of the Distribution Committee. The members of the Distribution
Committee shall serve or act in a non-fiduciary capacity. The Distribution Committee
ceases to exist upon the earlier of the death of Grantor, or the date the Distribution
Committee has less than two members other than Grantor. If the Distribution
Committee ceases to exist during Grantor’s life, distributions to the beneficiaries may
only be made to the Grantor’s Descendants pursuant to the Grantor’s Sole Power.

   The Permissible Beneficiaries, Grantor, and Trustee are all United States

persons within the meaning of § 7701(a)(30). Trust provides that Grantor also has the
authority and responsibility, exercisable solely in a fiduciary capacity, to direct the
trustee of the trust with respect to all decisions of the trust relating to the investment,
management, and voting powers granted to the trustee with respect to trust property.

   You have requested the following rulings:

  1. As long as the Distribution Committee is serving, no portion of the items of

income, deductions, and credits against tax of Trust shall be included in computing the
taxable income, deductions, and credits of Grantors or any member of the Distribution
Committee under § 671.

  2. The contribution of property to Trust by Grantor will not be a completed gift

subject to federal gift tax.

   3. Any distribution of property by the Distribution Committee from Trust to

Grantor will not be a completed gift, subject to federal gift tax, by any member of the
Distribution Committee.

    4. Any distribution of property by the Distribution Committee from Trust to any

beneficiary of Trust, other than to Grantor, will not be a completed gift subject to federal
gift tax, by any member of the Distribution Committee.

   5. The members of the Distribution Committee do not possess a general power

of appointment within the meaning of § 2041 and, accordingly, Trust will not be
includible in any Distribution Committee member’s gross estate under § 2041

RULING 1

    Section 671 provides that where it is specified in subpart E of part I of subchapter

J that the grantor or another person shall be treated as the owner of any portion of a
PLR-120842-16 4

trust, there shall then be included in computing the taxable income and credits of the
grantor or the other person those items of income, deductions, and credits against tax of
the trust which are attributable to that portion of the trust to the extent that such items
would be taken into account under chapter 1 in computing taxable income or credits
against the tax of an individual.

  Section 672(a) provides, for purposes of subpart E, the term “adverse party”

means any person having a substantial beneficial interest in the trust which would be
adversely affected by the exercise or nonexercise of the power which he possesses
respecting the trust.

   Sections 673 through 677 specify the circumstances under which the grantor is

treated as the owner of a portion of a trust.

   Section 673(a) provides that the grantor shall be treated as the owner of any

portion of a trust in which the grantor has a reversionary interest in either the corpus or
the income therefrom, if, as of the inception of that portion of the trust, the value of such
interest exceeds five (5) percent of the value of such portion.

   Section 674(a) provides, in general, that the grantor shall be treated as the owner

of any portion of a trust in respect of which the beneficial enjoyment of the corpus or the
income therefrom is subject to a power of disposition, exercisable by the grantor or a
nonadverse party, or both, without the approval or consent of any adverse party.

  Section 674(b) provides that § 674(a) shall not apply to the powers described in §

674(b) regardless of whom held.

   Section 674(b)(3) provides that § 674(a) shall not apply to a power exercisable

only by will, other than a power in the grantor to appoint by will the income of the trust
where the income is accumulated for such disposition by the grantor or may be so
accumulated in the discretion of the grantor or a nonadverse party, or both, without the
approval or consent of any adverse party.

  Section 674(b)(5) provides that § 674(a) shall not apply to a power to distribute

corpus to or for a beneficiary, provided that the power is limited by a reasonably definite
standard.

   Under § 675 and applicable regulations, the grantor is treated as the owner of

any portion of a trust if, under the terms of the trust agreement or circumstances
attendant on its operation, administrative control is exercisable primarily for the benefit
of the grantor rather than the beneficiary of the trust.
PLR-120842-16 5

    Section 675(4) provides that the grantor shall be treated as the owner of any

portion of a trust in respect of which a power of administration is exercisable in a
nonfiduciary capacity by any person without the approval or consent of any person in a
fiduciary capacity. For purposes of § 675(4), the term “power of administration” includes:
(A) a power to vote or direct the voting of stock or other securities of a corporation in
which the holdings of the grantor and the trust are significant from the viewpoint of
voting control and (B) a power to control the investment of the trust funds either by
directing investments or reinvestments, or by vetoing proposed investments or
reinvestments, to the extent that the trust funds consist of stocks or securities of
corporations in which the holdings of the grantor and the trust are significant from the
viewpoint of voting control. Under § 675(4)(B), the power of administration includes the
power to control the investment of the trust funds either by directing investments or
reinvestment.

   Section 1.675-1(b)(4)(i) of the Income Tax Regulations provides that if a power is

not exercisable by a person as trustee, the determination of whether the power is
exercisable in a fiduciary or a nonfiduciary capacity depends on all the terms of the trust
and the circumstances surrounding its creation and administration.

     Section 676(a) provides that the grantor shall be treated as the owner of any

portion of a trust, whether or not he is treated as such owner under any other provision
of part I, subchapter J, chapter 1, where at any time the power to revest in the grantor
title to such portion is exercisable by the grantor or a nonadverse party, or both.

    Section 677(a) provides, in general, that the grantor shall be treated as the owner

of any portion of a trust, whether or not he is treated as such owner under § 674, whose
income without the approval or consent of any adverse party is, or, in the discretion of
the grantor or a nonadverse party, or both, may be (1) distributed to the grantor or the
grantor's spouse; (2) held or accumulated for future distribution to the grantor or the
grantor's spouse; or (3) applied to the payment of premiums on policies of insurance on
the life of the grantor or the grantor's spouse.

   Section 678(a) provides that a person other than the grantor shall be treated as

the owner of any portion of a trust with respect to which: (1) such person has a power
exercisable solely by himself to vest the corpus or the income therefrom in himself, or
(2) such person has previously partially released or otherwise modified such a power
and after the release or modification retains such control as would, within the principles
of §§ 671-677, inclusive, subject a grantor of a trust to treatment as the owner thereof.

   Section 679(a) provides that a United States person who directly or indirectly

transfers property to a foreign trust shall be treated as the owner for his taxable year of
the portion of such trust attributable to such property if for such year there is a United
States beneficiary of any portion of such trust.
PLR-120842-16 6

   Accordingly, based solely on the facts submitted and the representations made,

we conclude that an examination of Trust reveals none of the circumstances that would
cause Grantor to be treated as the owner of any portion of Trust under §§ 673, 674,
676, or 677 as long as the Distribution Committee remains in existence. Also, as long
as Trust is a domestic trust, Grantor will not be treated as the owner of any portion of
Trust under § 679.

    We cannot determine at this time whether Grantor will be treated as the owner of

Trust under § 675(4). The circumstances surrounding the administration of Trust
determine whether Grantor holds the power of administration in a fiduciary capacity.
This is a question of fact, the determination of which must be deferred until the federal
income tax returns of the parties involved have been examined by the Office of the
District Director having examination jurisdiction over the returns.

   Further, because none of the members of the Distribution Committee has a

power exercisable by himself to vest trust income or corpus in himself, none shall be
treated as the owner of Trust under § 678(a).

RULINGS 2 AND 3

   Section 2501(a)(1) provides that a tax is imposed for each calendar year on the

transfer of property by gift during such calendar year by any individual, resident or
nonresident. Section 2511(a) provides that the gift tax applies whether the transfer is in
trust or otherwise, whether the gift is direct or indirect, and whether the property is real
or personal, tangible or intangible.

  Section 25.2511-2(b) of the Gift Tax Regulations provides that a gift is complete

as to any property, or part thereof or interest therein, of which the donor has so parted
with dominion and control as to leave in the donor no power to change its disposition,
whether for his own benefit or for the benefit of another. But if upon a transfer of
property (whether in trust or otherwise) the donor reserves any power over its
disposition, the gift may be wholly incomplete, or may be partially complete and partially
incomplete, depending upon all the facts in the particular case. Accordingly, in every
case of a transfer of property subject to a reserved power, the terms of the power must
be examined and its scope determined.

  Section 25.2511-2(b) provides an example, where the donor transfers property to

another in trust to pay the income to the donor or accumulate it in the discretion of the
trustee, and the donor retains a testamentary power to appoint the remainder among
the donor's descendants. The regulation concludes that no portion of the transfer is a
completed gift. However, if the donor had not retained a testamentary power of
appointment, but instead provided that the remainder should go to X or his heirs, the
PLR-120842-16 7

entire transfer would be a completed gift.

   Section 25.2511-2(c) provides that a gift is incomplete in every instance in which

a donor reserves the power to revest the beneficial title in himself or herself. A gift is
also incomplete if and to the extent that a reserved power gives the donor the power to
name new beneficiaries or to change the interests of the beneficiaries as between
themselves unless the power is a fiduciary power limited by a fixed or ascertainable
standard.

    Under § 25.2511-2(e), a donor is considered as himself having a power if it is

exercisable by the donor in conjunction with any person not having a substantial
adverse interest in the disposition of the transferred property or the income therefrom.
A trustee, as such, is not a person having an adverse interest in the disposition of the
trust property or its income.

   Section 25.2511-2(f) provides that the relinquishment or termination of a power to

change the beneficiaries of transferred property, occurring otherwise than by death of
the donor, is regarded as the event which completes the gift and causes the gift tax to
apply.

   Section 25.2511-2(g) provides that if a donor transfers property to himself as

trustee (or to himself and some other person, not possessing a substantial adverse
interest, as trustees), and retains no beneficial interest in the trust property and no
power over it except fiduciary powers, the exercise or nonexercise of which is limited by
a fixed or ascertainable standard, to change the beneficiaries of the transferred
property, the donor has made a completed gift and the entire value of the transferred
property is subject to the gift tax.

    Section 25.2511-2(e) does not define "substantial adverse interest." Section

25.2514-3(b)(2) provides, in part, that a taker in default of appointment under a power
has an interest that is adverse to an exercise of the power. Section 25.2514-3(b)(2)
also provides that a co-holder of a power is considered as having an adverse interest
where he may possess the power after the possessor's death and may exercise it at
that time in favor of himself, his estate, his creditors, or the creditors of his estate.

   In Estate of Sanford v. Commissioner, 308 U.S. 39 (1939) the taxpayer created a

trust for the benefit of named beneficiaries and reserved the power to revoke the trust in
whole or in part, and to designate new beneficiaries other than himself. Six years later,
in 1919, the taxpayer relinquished the power to revoke the trust, but retained the right to
change the beneficiaries. In 1924, the taxpayer relinquished the right to change the
beneficiaries. The Court stated that the taxpayer’s gift is not complete, for purposes of
the gift tax, when the donor has reserved the power to determine those others who
would ultimately receive the property. Accordingly, the Court held that the taxpayer's
PLR-120842-16 8

gift was complete in 1924, when he relinquished his right to change the beneficiaries of
the trust. A’s retention of a power to change the beneficial interests in a trust causes
the transfer to the trust to be incomplete for gift tax purposes, even though the power
may be defeated by the actions of third parties. Goldstein v. Commisisoner, 37 T.C.
897 (1962). See also Estate of Goelet v. Commissioner, 51 T.C. 352 (1968).

   In this case, Grantor retained the Grantor’s Consent Power over the net income

and principal of Trust. Under § 25.2511-2(e), a donor is considered as himself having a
power if it is exercisable by him in conjunction with any person not having a substantial
adverse interest in the disposition of the transferred property or the income therefrom.
The Distribution Committee members are not takers in default for purposes of
§ 25.2514-3(b)(2). They are merely co-holders of the power. Under § 25.2514-3(b)(2),
a co-holder of a power is only considered as having an adverse interest where he may
possess the power after the possessor's death and may exercise it at that time in favor
of himself, his estate, his creditors, or the creditors of his estate. In this case, the
Distribution Committee ceases to exist upon the death of Grantor. Accordingly, the
Distribution Committee members do not have interests adverse to Grantor under
§ 25.2514-3(b)(2) and for purposes of § 25.2511-2(e). Therefore, Grantor is considered
as possessing the power to distribute net income and principal to any beneficiary
himself because he retained the Grantor’s Consent Power.

   Grantor also retained the Grantor’s Sole Power over the principal of Trust. Under

§ 25.2511-2(c), a gift is incomplete if and to the extent that a reserved power gives the
donor the power to name new beneficiaries or to change the interests of the
beneficiaries as between themselves unless the power is a fiduciary power limited by a
fixed or ascertainable standard. In this case, the Grantor’s Sole Power gives Grantor
the power to change the interests of the beneficiaries. Even though Grantor's power is
limited by an ascertainable standard, i.e., health, education, maintenance and support,
Grantor's power is not a fiduciary power. Accordingly, the retention of the Grantor’s
Consent Power and the Grantor’s Sole Power causes the transfer of property to Trust to
be incomplete for federal gift tax purposes.

   Further, Grantor retained the Grantor’s Testamentary Power to appoint the

property in Trust to any persons, other than to the Grantor’s estates, Grantor’s creditors,
or the creditors of Grantor’s estates. Under § 25.2511-2(b), the retention of a
testamentary power to appoint the remainder of a trust is considered a retention of
dominion and control over the remainder. Accordingly, the retention of this power
causes the transfer of property to Trust to be incomplete with respect to the remainder
for federal tax purposes.

  Finally, the Distribution Committee members possess the Unanimous Member

Power over net income and principal. This power is not a condition precedent to
Grantor’s powers. Grantor’s powers over the net income and principal are presently
PLR-120842-16 9

exercisable and not subject to a condition precedent. Grantor retains dominion and
control over the net income and principal of Trust until the Distribution Committee
members exercise their Unanimous Member Power. Accordingly, the Unanimous
Member Power does not cause the transfer of property to be complete with respect to
the income interest for federal gift tax purposes. See Goldstein v. Commissioner, 37
T.C. 897 (1962); Estate of Goelet v. Commissioner, 51 T.C. 352 (1968),

    Accordingly, based on the facts submitted and the representations made, we

conclude that the contribution of property to Trust by Grantor is not a completed gift
subject to federal gift tax. Any distribution from Trust to Grantor is merely a return of
Grantor’s property. Therefore, we conclude that any distribution of property from Trust
by the Distribution Committee to Grantor will not be a completed gift subject to federal
gift tax, by any member of the Distribution Committee. Further, upon the death of
Grantor, the fair market value of the property in Trust is includible in his gross estate for
federal estate tax purposes.

RULINGS 4 AND 5

   Section 2514(b) provides that the exercise or release of a general power of

appointment created after October 21, 1942, shall be deemed a transfer of property by
the individual possessing such power.

  Section 2514(c) provides that the term "general power of appointment" means a

power which is exercisable in favor of the individual possessing the power (possessor),
the possessor's estate, the possessor's creditors, or the creditors of the possessor's
estate.

  Section 25.2514-1(c)(1) provides that a power of appointment is not a general

power if by its terms it is exercisable only in favor of one or more designated persons or
classes other than the possessor or his creditors, or the possessor's estate or the
creditors of the estate or expressly not exercisable in favor or the possessor or his
creditors, or the possessor’s estate or the creditors of his estate.

  Section 2514(c)(3)(A) provides that, in the case of a power of appointment

created after October 21, 1942, if the power is exercisable by the possessor only in
conjunction with the creator of the power, such power is not deemed a general power of
appointment.

  Section 2514(c)(3)(B) provides, that in the case of a power of appointment created

after October 21, 1942, if the power is not exercisable by the possessor except in
conjunction with a person having a substantial interest in the property subject to the
power, which is adverse to the exercise of the power in favor of the possessor, such
power shall not be deemed a general power of appointment. For purposes of
PLR-120842-16 10

§ 2514(c)(3)(B), a person who, after the death of the possessor, may be possessed of a
power of appointment (with respect to the property subject to the possessor's power)
which he may exercise in his own favor shall be deemed as having an interest in the
property and such interest shall be deemed adverse to such exercise of the possessor's
power.

   Section 25.2514-3(b)(2) provides, in part, that a coholder of a power has no

adverse interest merely because of his joint possession of the power nor merely
because he is a permissible appointee under a power. However, a co-holder of a power
is considered as having an adverse interest where he may possess the power after the
possessor's death and may exercise it at that time in favor of himself, his estate, his
creditors, or the creditors of his estate. Thus, for example, if X, Y, and Z held a power
jointly to appoint among a group of persons which includes themselves and if on the
death of X the power will pass to Y and Z jointly, then Y and Z are considered to have
interests adverse to the exercise of the power in favor of X. Similarly, if on Y's death the
power will pass to Z, Z is considered to have an interest adverse to the exercise of the
power in favor of Y.

   Section 2041(a)(2) provides that the value of the gross estate shall include the

value of all property to the extent of any property with respect to which the decedent has
at the time of death a general power of appointment created after October 21, 1942, or
with respect to which the decedent has at any time exercised or released such a power
by a disposition which is of such nature that if it were a transfer of property owned by
the decedent, such property would be includible in the decedent's gross estate under
§§ 2035 to 2038, inclusive.

   Under § 2041(b)(1), the term "general power of appointment" is defined, in

relevant part, to mean a power which is exercisable in favor of the decedent, his estate,
his creditors, or the creditors of his estate.

  Section 2041(b)(1)(C)(i) provides, however, that in the case of a power of

appointment created after October 21, 1942, if the power is not exercisable by the
decedent except in conjunction with the creator of the power, such power is not deemed
a general power of appointment.

  Section 2041(b)(1)(C)(ii) provides, however, that in the case of a power of

appointment created after October 21, 1942, if the power is not exercisable by the
decedent except in conjunction with a person having a substantial interest in the
property, subject to the power, which is adverse to the exercise of the power in favor of
the decedent -- such power shall not be deemed a general power of appointment. For
purposes of § 2041(b)(1)(C)(ii), a person who, after the death of the decedent, may be
possessed of a power of appointment (with respect to the property subject to the
decedent's power) which he may exercise in his own favor shall be deemed as having
PLR-120842-16 11

an interest in the property and such interest shall be deemed adverse to such exercise
of the decedent's power.

   Section 20.2041-3(c)(2) of the Estate Tax Regulations provides, in part, that a

co-holder of a power of appointment has no adverse interest merely because of his joint
possession of the power nor merely because he is a permissible appointee under a
power. However, a co-holder of a power is considered as having an adverse interest
where he may possess the power after the decedent's death and may exercise it at that
time in favor of himself, his estate, his creditors, or the creditors of his estate. Thus, for
example, if X, Y, and Z held a power jointly to appoint among a group of persons which
includes themselves and if on the death of X the power will pass to Y and Z jointly, then
Y and Z are considered to have interests adverse to the exercise of the power in favor
of X. Similarly, if on Y's death the power will pass to Z, Z is considered to have an
interest adverse to the exercise of the power in favor of Y.

   The power held by the Distribution Committee members under the Grantor’s

Consent Power is a power that is exercisable only in conjunction with the creator,
Grantor. Accordingly, under §§ 2514(b) and 2041(a)(2), the Distribution Committee
members do not possess general powers of appointment by virtue of possessing this
power. Further, the power held by the Distribution Committee members under the
Unanimous Member Power is not a general power of appointment for purposes of
§§ 2514(b) and 2041(a)(2). As in the examples in §§ 25.2514-3(b)(2) and 20.2041-
3(c)(2), the Distribution Committee members have substantial adverse interests in the
property subject to this power. Accordingly, any distribution made from Trust to a
beneficiary, other than to Grantor, pursuant to the exercise of these powers, the
Grantor's Consent Power and the Unanimous Member Power, are not gifts by the
Distribution Committee members. Instead, such distributions are gifts by Grantor.

   Based on the facts and representations made, we conclude that any distribution

of property from Trust by the Distribution Committee to any beneficiary of Trust, other
than Grantor, will not be a completed gift subject to federal gift tax, by any member of
the Distribution Committee. Further, we conclude that any distribution of property from
Trust to a beneficiary, other than to Grantor, will be completed gifts by Grantor. Finally,
we conclude that the powers held by the Distribution Committee are not general powers
of appointment for purposes of § 2041(a)(2) and, accordingly, no member of the
Distribution Committee upon his or her death will include in his or her estate any
property held in Trust because such member is deemed to have a general power of
appointment within the meaning of § 2041 over property held in Trust.

   Except as specifically ruled herein, we express no opinion on the federal tax

consequences of the transaction under the cited provisions or under any other
provisions of the Code. Specifically, we express no opinion on the trust provisions
PLR-120842-16 12

permitting Trustee to distribute income or principal to trustees of other trusts
(decanting).

  This ruling is directed only to the taxpayer who requested it. Section

6110(k)(3) provides that it may not be used or cited as precedent.

                                      Sincerely,


                                      Lorraine E. Gardner
                                      Lorraine E. Gardner
                                      Senior Counsel, Branch 4
                                      Office of Associate Chief Counsel
                                      (Passthroughs and Special Industries)

Enclosure
Copy for section 6110 purposes
~~~