Letter Ruling 9820021 - February 18, 1998

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 106-113

106

LETTER RULING

9820021–

FEBRUARY18, 1998

This ruling involves the use of a trust as the beneficiary of a qualified

profit sharing plan. Key portions of the ruling follow.

According to the facts in the ruling, A was a participant in Plan X,

which is represented to be a qualified profit sharing plan. Distributions

under Plan X had not commenced to A prior to his death. A had filed a

beneficiary designation naming Trust M as his beneficiary to receive any

benefits payable at death under Plan X.

Under Trust M, at A’s death the trustee first was required to pay A’s

death taxes, expenses of last illness and funeral, and debts and admin-

istration expenses to the extent such items could not be paid out of A’s

estate.

A portion of Trust M’s property passed to two trusts: Marital Fund I

and Marital Fund II, which is represented to qualify for the federal estate

tax marital deduction. B is the surviving spouse of A and is the income

beneficiary of Marital Fund I and Marital Fund II.

Trust M provides, in part, that the income and principal of the Mar-

ital Funds will be distributed as follows: (a) commencing at A’s death

and during the life of B, the trustee shall pay the income to B in annual

or more frequent installments as may be convenient to her; (b) in addi-

tion, the trustee from time to time may pay to B such amounts from the

principal as the trustee considers necessary for B’s health and medical

needs, taking into consideration the income and other cash resources

known to the trustee to be available for such purpose from other sources;

and (c) upon B’s death all accrued income or undistributed income shall

be distributed to or for the benefit of such appointees (including B’s

estate) as B may provide by will, making specific reference to the power

of appointment.

At the death of B, any interest in Marital Fund II (which also receives