Means to an End: Electively Forcing Vesting to Suit Tax Rules Against Perpetuities

Authors

James P. Spica

Abstract

Editor's synopsis: Exercising special powers of appointment over tax advantages trusts in a jurisdiction that has enacted perpetuities reform can be hazardous in light of the so-called "Delaware tax trap" and the "constructive additions" and trust-modification rules of the Treasury's GST-tax effective date regulations. Compliance with these federal tax rules against perpetuities may or may not be guaranteed by the applicable reform legislation. This Article examines a particular situation in which self-help is required for compliance, offers a set of forced-vested provisions to fit the bill, and indicates how those provisions can be adatpted for use in other situations in which, in light of local perpetuities reform, the exercise of a special power of appointment threatens the longevity of federal tax advantages.

Recommended Citation

Spica, James P. (2014) "Means to an End: Electively Forcing Vesting to Suit Tax Rules Against Perpetuities," ACTEC Law Journal: Vol. 40: No. 2, Article 5.
Available at: https://scholarlycommons.law.hofstra.edu/acteclj/vol40/iss2/5