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Abstract
Letter Ruling 200603040 suggests a method for including Crummey powers in an intentionally defective grantor trust (IDGT) without having beneficiaries treated as owners of the trust. The grantor in the ruling proposed to create a trust with the following features: 1. The grantor would retain a power to reacquire trust assets by substituting other property of equal value. 2. The substitution power could only be exercised in a fiduciary capacity. 3. The trustee would not be a related or subordinate party within the meaning of Section 672(c). 4. During the grantor's life, the trustee would have discretion to make distributions of income or principal to the grantor's spouse. 5. The trust would give the spouse Crummey withdrawal rights. Ltr. Rul. 200603040 suggests that the IRS does not believe that retaining the power causes estate inclusion. If the IRS believed this, it should have said so in the ruling or at least made it clear that it was not ruling on this issue.