Unlimited Duration Trusts - Minnesota CLE

Estate of Murphy v. Commissioner
71 T.C. 671 (1979) (Wisconsin):
• IRS acquiesced in Murphy 1979
• Only reported case involving IRC § 2041(a)(3)
• Tax court held: the exercised LPofA to create another LPofA did not spring Delaware Tax Trap
because:
– Under applicable Wisconsin law, the exercise of a LPofA did not commence a new perpetuities period.
– Delaware Tax Trap was not violated in Wisconsin,
– Wisconsin has/had a perpetuities statute expressed in terms of a rule against suspension of power of alienation
[rather than]
based upon the remoteness of vesting
• States that follow the Murphy Case:
– Pre 1986: Idaho, South Dakota and Wisconsin relied on Murphy case
– Post 1986: Alaska (partial), Delaware (possible issue with LPA), Kentucky, Missouri, New Hampshire, New Jersey
and North Carolina all relied upon Murphy.
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