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Sep 1, 2008 12:00 PM
New CLUT Forms, Some Safe Harbors
In Revenue Procedure 2008-45, 2008-30 Internal Revenue Bulletin 224 and 2008-46, 2008-30 IRB 238 — both issued July 24, 2008 — the Internal Revenue Service provides sample forms for creating both testamentary and inter vivos charitable lead unitrusts (CLUTs). These sample forms contain numerous helpful annotations and alternate provisions. If a CLUT is established with provisions substantially similar to those contained in the sample documents, the trust will be a “qualified” CLUT. And if a CLUT is qualified, the creator is assured of being entitled to a tax deduction for the value of the charity's interest in the trust.
A CLUT, of course, is an irrevocable trust that provides for a unitrust percentage to be paid to charity for a period of years or the life or lives of certain individuals during the term of the trust. The period during which a charity receives its payments is known as the lead term. At the end of a lead term, any remaining trust principal passes to non-charitable beneficiaries, usually the grantor's family. If a CLUT is properly drafted, the grantor or his estate receives an estate or gift tax deduction for the discounted present value of the charity's right to receive the unitrust payments during the trust term.
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| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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