Posted July 8th, 2019

Philanthropy Puzzler: Charitable Remainder Unitrust

The “Philanthropy Puzzler” features gift questions fundraisers may encounter in the field, followed by solutions from our panel of experts. If you would like to send us your own “puzzler,” please email us at info@SHARPEnet.com with “Philanthropy Puzzler” in the subject line.

Philanthropy Puzzler

Sara established a charitable remainder unitrust, naming herself as the sole income beneficiary. Her brother, Edward, is having his will prepared and, as a strong supporter of the charity named as remainderman of Sara’s trust, wants to include a bequest for an additional contribution to Sara’s trust if he predeceases her. Sara’s unitrust allows additional contributions. Can he make a contribution to Sara’s trust through his estate?

Puzzler Solution

In the annotations for the IRS sample charitable remainder unitrust documents, the IRS indicates that “only the donor or a donor’s estate may make an additional contribution” to a unitrust. Contributions by others may cause the disqualification of the trust under Rev. Procs. 2005-52 through 2005-59. Edward could, instead, leave a bequest in a separate charitable remainder unitrust to benefit Sara and then their favorite charity. For purposes of the rule, “donor” includes the actual contributor and the actual contributor’s spouse. ■

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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