Rescue Plans for IRAs Left to Marital TrustsRescue Plans for IRAs Left to Marital Trusts
The Internal Revenue Service has been concerned about whether retirement benefit plans qualify for the marital deduction when they're left to a trust that ordinarily qualifies for the marital deduction. Hard to believe that this would even be in doubt, but it has been. In fact, in Revenue Ruling 2006-261 (the 2006 IRS ruling), the IRS felt the need to list safe harbors that would guarantee the marital
Steven B. Gorin & Michael J. Jones
The Internal Revenue Service has been concerned about whether retirement benefit plans qualify for the marital deduction when they're left to a trust that ordinarily qualifies for the marital deduction. Hard to believe that this would even be in doubt, but it has been. In fact, in Revenue Ruling 2006-261 (the 2006 IRS ruling), the IRS felt the need to list safe harbors that would guarantee the marital deduction in these circumstances.
Yet, as farfetched as this may sound, because of a quirk in how the Uniform Principal and Income Act of 1997 (UPIA) defined “income,” the Service found that, in UPIA-compliant states, retirement benefits left in trust did not qualify for its safe harbor for a marital deducti...
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