PLR 200944002PLR 200944002

IRS declines to rule whether a self-settled asset protection trust is subject to IRC Section 2036 estate inclusion, leaving such trusts vulnerable

In PLR 200944002 (Oct. 30, 2009), the taxpayer created an irrevocable trust for the benefit of himself, his spouse and his descendants. Under applicable state law, the trust wouldn't be reachable by the taxpayer's creditors as the trust was a self-settled asset protection trust. The taxpayer requested a ruling on (1) whether transfers to the trust would be a completed gift, and (2) whether the assets of the trust would be included in the taxpayer's gross estate.

The trustee, who wasn't a related or subordinate party under IRC Section 672(c), could distribute income and principal to the taxpayer,...