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for making gifts to their children. Eastland further advised
petitioners that the partnerships should include a charity as a
partner in light of the recent enactment of section 2704 and to
“make sure that traditional valuation rules apply to the
partnerships.”5
Kerr Issue GST Trust
On December 29, 1993, petitioners, as grantors, and their
children, as trustees, executed a document entitled “Agreement
Creating the Kerr Issue GST Trusts”. The agreement provided that
each of the Kerr children would act as the trustee of a separate
trust under which he or she would be the primary beneficiary. The
agreement further provided that each trust would terminate upon the
death of the primary beneficiary and that any remaining trust
property would pass to the living issue of the primary beneficiary;
i.e., the Kerr grandchildren. On December 29, 1993, petitioners
executed separate wills, which included “pour over” provisions to
the Kerr Issue GST Trusts in an amount equal to the available
generation-skipping tax exemption.
5 Sec. 2704(b), quoted infra pp. 20-21, generally provides
that restrictions on the liquidation of a family partnership will
not be considered in valuing a gift of a partnership interest
from one family member to another if the family has control of
the partnership before the transfer and the family can remove the
restriction on liquidation after the transfer.
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Last modified: May 25, 2011