Executor may make late GST allocations to three trusts

Plain-English summary

A donor made pre-2001 transfers to three descendant trusts created by the donor's spouse, and the spouses elected to split the gifts. The donor relied on an accounting firm to prepare Form 709, but the firm did not advise about the consequences of failing to allocate generation-skipping transfer tax exemption. After the donor's death, the executor requested relief and represented that enough exemption had been available. The IRS found that the regulatory standards were satisfied and granted 120 days to allocate the donor's GST exemption on an amended Form 709.

Ruling snapshot

• Question: May the executor make late GST exemption allocations to the donor's split-gift transfers to three trusts?
• Outcome: Approved, with 120 days to file an amended Form 709
• Key authorities: IRC §§ 2513, 2631, 2632, 2642(g)(1), and 2652(a)(2); Treas. Reg. § 26.2642-7

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202521008 Third Party Communication: None
Release Date: 5/23/2025 Date of Communication: Not Applicable
Index Number: 2642.07-00
Person To Contact:
--------------------------------------------------- -----------------, ID No. -----------------
--------------------------------- Telephone Number:
------------------------------- ----------------------
-------------------------- Refer Reply To:
---------------------------- CC:PT&E:B04
PLR-115410-24
Date:
February 19, 2025
In Re: ---------------------------------

LEGEND

Donor = --------------------
-------------------------
Spouse = ------------------------
-------------------------
Date 1 = ----------------------
Date 2 = ----------------
Date 3 = -------------------------
Year = -------
Trust 1 = -------------------------------------------------------------
-----------------------
Trust 2 = -------------------------------------------------------------
-----------------------
Trust 3 = ------------------------------------------------------------
-----------------------
Son = --------------------
-------------------------
Accounting Firm = ---------------------------------------
-----------------------------------------------

Dear ----------------

This letter responds to your authorized representative’s letter dated August 13, 2024,
and subsequent correspondence, requesting an extension of time under § 2642(g) of
the Internal Revenue Code and § 26.2642-7 of the Generation-Skipping Transfer (GST)
Tax Regulations to allocate GST exemption to transfers to trusts.

The facts and representations submitted are as follows:

PLR-115410-24 2

On Date 1, Spouse established Trust 1 and Trust 2 for the benefit of her descendants.
On Date 2, Spouse established Trust 3 for the benefit of her descendants. In Year, a
year before 2001, Donor made a transfer to each of Trust 1, Trust 2, and Trust 3.

Donor relied on Accounting Firm to prepare Form 709, United States Gift (and
Generation-Skipping Transfer) Tax Return, reporting his Year transfers to Trust 1, Trust
2, and Trust 3. Donor and Spouse signified their consent to treat the transfers occurring
in Year as having been made one-half by each under § 2513 of the Code. Accounting
Firm did not advise Donor regarding the consequences of failing to allocate GST
exemption to the Year transfers to Trust 1, Trust 2, and Trust 3. As a result, Donor did
not allocate GST exemption to the Year transfers to Trust 1, Trust 2, and Trust 3.

It is represented that Donor had sufficient GST exemption to allocate to the Year
transfers to Trust 1, Trust 2, and Trust 3.

Donor died on Date 3. Son was appointed executor of estate of Donor.

RULING REQUESTED

Son requests an extension of time under § 2642(g) to allocate GST exemption to the
Year transfers to Trust 1, Trust 2, and Trust 3.

LAW AND ANALYSIS

Section 2601 imposes a tax on every generation-skipping transfer. A
generation-skipping transfer is defined under § 2611(a) as (1) a taxable distribution,
(2) a taxable termination, and (3) a direct skip.

Section 2602 provides that the amount of the tax imposed by § 2601 is the taxable
amount multiplied by the applicable rate.

Section 2631(a) provides that, for purposes of determining the inclusion ratio, every
individual shall be allowed a GST exemption which may be allocated by such individual
(or his executor) to any property with respect to which such individual is the transferor.

Section 2631(b) provides that any allocation under § 2631(a), once made, shall be
irrevocable.

Section 2632(a)(1) provides that an individual’s GST exemption may be allocated at any
time on or before the date prescribed for filing the estate tax return for such individual’s
estate (determined with regard to extensions), regardless of whether such return is
required to be filed. Section 2632(a)(2) provides that the manner in which allocations
are to be made shall be prescribed by forms or regulations issued by the Secretary.

PLR-115410-24 3

Section 2632(c)(1) provides that if any individual makes an indirect skip during such
individual’s lifetime, any unused portion of such individual’s GST exemption shall be
allocated to the property transferred to the extent necessary to make the inclusion ratio
for such property zero. If the amount of the indirect skip exceeds such unused portion,
the entire unused portion shall be allocated to the property transferred.

Section 2632(c)(3)(A) provides that for purposes of this subsection, the term “indirect
skip” means any transfer of property (other than a direct skip) subject to the tax imposed
by chapter 12 made to a GST trust.

Section 2632(c)(5)(A)(i) provides that an individual may elect to have the automatic
allocation rules not apply to (I) an indirect skip, or (II) any or all transfers made by such
individual to a particular trust.

Section 2642(b)(1)(A) provides that, except as provided in § 2642(f), if the allocation of
the GST exemption to any transfers of property is made on a gift tax return filed on or
before the date prescribed by § 6075(b) for such transfer or is deemed to be made
under § 2632(b)(1) or (c)(1), the value of such property for purposes of § 2642(a) shall
be its value as finally determined for purposes of chapter 12 (within the meaning of
§ 2001(f)(2)), or, in the case of an allocation deemed to have been made at the close of
an estate tax inclusion period, its value at the time of the close of the estate tax
inclusion period.

Section 2513(a) provides, generally, that, if the parties consent, a gift made by one
spouse to any person other than his or her spouse shall, for gift tax purposes, be
considered as made one-half by the donor spouse and one-half by his or her spouse.

Section 2652(a)(2) provides that if, under § 2513, one-half of a gift is treated as made
by an individual and one-half of such gift is treated as made by the spouse of such
individual, such gift shall be so treated for purposes of chapter 13.

Section 2642(g)(1)(A) provides that the Secretary shall by regulation prescribe such
circumstances and procedures under which extensions of time will be granted to make
an allocation of GST exemption described in § 2642(b)(1) or (2), and an election under
§ 2632(b)(3) or (c)(5). Such regulations shall include procedures for requesting
comparable relief with respect to transfers made before the date of the enactment of
§ 2642(g).

Section 2642(g)(1)(B) provides that in determining whether to grant relief under this
paragraph, the Secretary shall take into account all relevant circumstances, including
evidence of intent contained in the trust instrument or instrument of transfer and such
other factors as the Secretary deems relevant. For purposes of determining whether to
grant relief under this paragraph, the time for making the allocation (or election) shall be
treated as if not expressly prescribed by statute.

PLR-115410-24 4

Section 26.2642-7 of the Generation-Skipping Transfer Tax Regulations sets forth the
procedures for requesting an extension of time to make an allocation of GST exemption
described in § 2642(b)(1) or (2), and an election under § 2632(b)(3) or (c)(5), and the
standards used to determine whether relief may be granted.

Section 26.2642-7(d)(1) provides that requests for relief will be granted when and to the
extent that the transferor or the executor of the transferor’s estate provides evidence
establishing to the satisfaction of the IRS that the transferor or the executor of the
transferor’s estate acted reasonably and in good faith, and that the grant of relief will not
prejudice the interests of the government.

Section 26.2642-7(d)(2) provides a nonexclusive list of factors that will be considered in
determining whether the transferor or the executor of the transferor’s estate acted
reasonably and in good faith for purposes of § 26.2642-7, including reasonable reliance
by the transferor or the executor of the transferor’s estate on the advice of a qualified
tax professional.

Based on the facts submitted and the representations made, we conclude that the
requirements of § 26.2642-7 have been satisfied. Therefore, Donor is granted an
extension of time of 120 days from the date of this letter to allocate Donor’s GST
exemption to the Year transfers to Trust 1, Trust 2, and Trust 3.

The allocation of GST exemption should be made on an amended Form 709 for Year 2.
The Form 709 should be filed with the Internal Revenue Service at the following
address: Internal Revenue Service Center, ATTN: E&G, Stop 824G, 7940 Kentucky
Drive, Florence, KY 41042-2915.

In accordance with the Power of Attorney on file with this office, we have sent a copy of
this letter to your authorized representative.

Except as expressly provided herein, we neither express nor imply any opinion
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.

PLR-115410-24 5

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.

                                               Sincerely,

                                               Associate Chief Counsel
                                               (Passthroughs, Trusts, and Estates)


                                     By:       _____/s/____________________
                                               Daniel J. Gespass
                                               Senior Technician Reviewer, Branch 4
                                               Office of the Associate Chief Counsel
                                               (Passthroughs, Trusts, and Estates)

Enclosure
Copy for § 6110 purposes

cc: