The American Bankers Association announced on August 24, 2007, that the ABA and eleven state bankers associations submitted a friend-of-the-court brief with the U.S. On August 23 The filing of the Amicus Brief was made, 2007, according to the USA Supreme Court’s Docket for the case, found here. The organizations’ short argues for a reversal of a lower-court ruling totally limiting the deductibility of investment-advice fees incurred by trustees. The “ABA Amicus Brief to the Supreme Court in the Rudkin Case” (PDF, 19 webpages) was made available online by the ABA on its “Center for Securities, Trust & Investments” website.
It was also offered here on the site of the American College of Trust & Estate Counsel. The American Bankers Association was joined in the processing by bankers associations from the next expresses: California, Florida, Illinois, Kansas, Massachusetts, Missouri, NY, North Dakota, Ohio, Pennsylvania, and Texas. The Pennsylvania Bankers Association was shown as an amicus; and a Pennsylvania statute — 20 Pa. Note: This last statement is a correction from the original posting. The ABA is the largest nationwide trade association of the bank industry in the nationwide country. It represents banks and holding companies of all sizes in each one of the fifty states and the District of Columbia, including community, regional, and money center banks.
The ABA also represents savings organizations, trust companies, and savings banks. ABA users hold approximately 95% of the U.S. ’s domestic assets. ABA frequently appears in litigation, either as a celebration or amicus curiae, in order to safeguard and promote the interests of the bank industry and its own members. The amici have a primary interest in the outcome of this litigation. A lot of ABA’s and the constant state Association Amici’s associates serve as trustees and executors, or act as agents for individuals who serve as executors or trustees. The problem presently before the Court concerns the proper construction and interpretation of Section 67(e) of the Internal Revenue Code (the “Tax Code”), 26 U.S.C.
§ 67(e). This statute addresses the taxation of estates and trusts, specifically the deductibility of investment advisory fees. The outcome of the case will have a direct impact upon the way in which in which the amici’s members engage in (and are taxed on) their trust business. The ABA and the State Association Amici respectfully post that the decision below was improperly determined because the court failed to recognize that, unlike individual traders, trustees come with an affirmative legal duty to prudently make investments trust resources. While individual investors often seek professional investment advice, they actually so out of common sense rather than legal obligation.
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Trustees, on the other hand, manage resources and act with respect to others which, in turn, bind them to certain legal duties and responsibilities, including a duty to control the trust that is in their care prudently. This legal duty of prudence is embodied and codified in the Uniform Prudent Investor Act (“UPIA”). Since the completion of the UPIA in 1995, versions of this uniform statute have been used by 44 states and the District of Columbia as the standard for trust investment laws.
The full discussion and citations are established in the brief. It is well worth noting that the Commissioner opposed overview of this case partly on the grounds that the IRS was intending to issue a notice of suggested rulemaking regarding the deductibility of investment consultant fees. The IRS had taken the position that after the rules were issued, the matter would be resolved because the court would be asked to defer to the agency’s interpretation of section 67(e) under Chevron U.S.A. Inc. v. NRDC, 467 U.S. The IRS has subsequently issued a notice of proposed rulemaking that looks for comment on suggested regulations that address the issue before the courtroom. See Section 67 Restrictions on Trusts or Estates, 72 Fed.
The amici respectfully submit that, apart from the rather wondering timing, the IRS’s suggested rules are irrelevant to the court’s account of the case. The notice of suggested rulemaking was issued by the IRS well after the operative facts of this case occurred, no final rules have been released.
In sum, the Court should conclude that the next Circuit made the decision the case below incorrectly. The existence of a legal duty of prudence differentiates the average person investor from the trustee, and the fulfillment of this duty of prudence may necessitate a trustee to retain expert investment help. The advice received by the trustee (and that the fees are incurred) is generally peculiar to the particular trust in light of the trust’s purpose and other factors outlined by the UPIA. Based on the foregoing, the ABA and State Association Amici desire the Court to grant the petition for certiorari to solve the conflict between the circuits and to provide a homogeneous interpretation of the Tax Code.
In my original publishing, I had stated that the Pennsylvania Bankers Association was not among the amicus parties. This was clearly incorrect, as indicated by the set of participants. I transformed the text of the posting above to be accurate. I thank Louise for telling me; and I apologize for the error.
