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Abstract: 

Advisors often rely upon §53.4941(d)- 1(b)(3) of the regulations (popularly called the probate exception, but officially dubbed “the estate administration exception”) to plan and effectuate transactions that would otherwise violate the rule against self-dealing. That provision authorizes certain transactions between private foundations (as well as charitable remainder trusts and charitable lead trusts) and their disqualified persons under circumstances in which the parties would otherwise incur excise taxes under IRC §4941 and be required to unwind the transactions in question. A recent private letter ruling, PLR 201145026, provides a helpful example of how the probate exception can be very useful.

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