[WSBAPT] Charitable Remainder Trust Question-Referral

[Lewis, Amy C.]

Jane,

                Typically the client contributes his or her income interest in the CRUT to the charitable gift annuity.  The CRUT can then terminate with the remainder interest distributed to the charity.  The charitable gift annuity is not funded with the full value of the CRUT, but only the current value of the retained income interest.  Many charities can illustrate this transaction for the client.


Amy C. Lewis, Attorney

[cid:100logo55e14a]

ESTATE PLANNING & PROBATE

1200 Wells Fargo Plaza | 1201 Pacific Avenue | Tacoma, WA 98402
phone 253.572.4500 | fax 253.272.5732 | www.eisenhowerlaw.com<http://www.eisenhowerlaw.com/>

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jane Bitz
Sent: Wednesday, January 07, 2015 10:33 AM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Charitable Remainder Trust Question-Referral

My client and her husband set up a CRUT in 2005 funded with $150,000 to benefit two charities upon the death of both spouses.

She is the surviving Trustee and has asked me if she can invest the principal of the Trust into charitable gift annuities with each of the organizations. This will serve two purposes: 1) she will get income that she is not receiving from the Unitrust because the costs of the Trust (accounting fees + investment fees) eat up a lot of the annual income and 2) simplify distribution upon her death to each of the charities. It sounds like she is asking to dissolve the trust by immediate gifts to the charities. Is this allowed under the IRS rules?

If she cannot dissolve the Trust, is there any problem with the Trust deciding to invest in charitable gift annuities? This looks like it might result in "double dipping" on the charitable deduction, but she would not take any additional charitable deduction for the investment in the annuities on her personal taxes.

Is there an expert in this area who might be able to answer these questions?

Thanks.
Jane.

Jane G Bitz
Attorney at Law, PLLC
12209 E Mission, Suite 5
Spokane Valley WA 99206-4824
(509) 927-9700; FAX (509) 777-1800
jane at jbitzlaw.com<mailto:jane at jbitzlaw.com>



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