IRS Issues PLR Confirming Administrative Trust Modifications Preserve GST Exemption for Grandfathered Trusts

The IRS has issued a private letter ruling on I.R.C. §§1001, 2041, 2501, and 2601 and Treas. Reg. §26.2601 confirming administrative trust modifications preserving generation-skipping transfer (GST) tax exemption status for trusts irrevocable before Sept. 25, 1985. The modifications include removing geographical trustee requirements, adding investment direction powers to advisory committees acting in fiduciary capacities, and trustee indemnification provisions without shifting beneficial interests to lower generation beneficiaries or creating general powers of appointment under I.R.C. §2041. The trust retains its GST tax exemption because the modifications are administrative in nature and do not extend vesting periods beyond the original trust ...