ESOP Estate Taxes

Congress sometimes passes legislation that appears to be general in scope, but really is meant mostly for a single company. In this case, the House passed a provision allowing an ESOP to act as a charitable trust for an estate, provided the plan was in existence August 1, 1996, the decedent and members of the decedent's family own not more than 10% of the value of the company stock, and the ESOP owns at least 60% of the stock after the transfer. There are additional restrictions as well, including full voting rights for participants and an independent trustee. The provision was initiated by the Sammons Company, a Texas-based company with an ESOP. It is not included in the Senate version, and, if passed, is unlikely to be used much, if at all, beyond this one case.