CONCORD, NH — Dodd Griffith, an attorney with the law firm of Gallagher, Callahan & Gartrell, recently held a seminar in cooperation with the New Hampshire Bankers Association explaining a case of significance to bankers, Rudkin Testamentary Trust v. Commissioner.
“This case is important,” said Griffith, “because it will directly impact how banks, trust companies, and other fiduciaries, will structure their fees for trust-related services going-forward.”
Griffith’s presentation provides a review of the Rudkin case and applicable law, the current IRS proposed rules and how they may be changed. It is available as a PowerPoint file: Limits on Deduction of Trust Fees. Also available is an IRS Interim Guidance on Rudkin and Trust Fees in PDF form published February 27, 2008.
In Rudkin, the U.S. Supreme Court held that investment advisory fees paid by trusts are deductible only to the extent that they exceed 2% of the trust’s adjusted gross income. The trustee had sought a deduction for the full amount of the investment advisory fees paid by the trust, based on an IRS code provision that allows a full deduction for costs incurred in connection with the administration of a trust “which would not have been incurred if the property were not held in trust.” The trustee argued that the prudent investor rule required him to engage an investment advisor and that, consequently, the investment advisory fees were required because the property was held in trust. The Court rejected this argument, based on its finding that investment advisory fees are customarily paid by many individuals who do not hold property in trust; and that there was nothing unique about the trust arrangement that made it necessary for the trustee to engage an investment advisor.
For more information, please contact Dodd Griffith directly at 603-228-1181.
About Gallagher, Callahan & Gartrell
Gallagher, Callahan & Gartrell is a multidisciplinary law firm with offices in Concord, NH. Learn more at gcglaw.com.