IRS PLR: Rulings Regarding Life Insurance Contracts Issued to Grantor, Non-Grantor Trusts (IRC §72)

The IRS issued multiple rulings regarding life insurance contracts (“Contracts”) issued by a life insurance company to both grantor and non-grantor trusts. The IRS stated that the life insurance company issued nonqualified deferred annuity contracts that were fixed, indexed, or variable and that contained customary, industry standard terms. The IRS ruled that for purposes of tax code Section 72(q)(2), the grantor is the taxpayer, exceptions based on the age, disability, and life or life expectancy of the grantor would apply. The IRS also ruled that because grantor trusts are the holders of the Contracts, the exception in Section ...