Over the years, many charitable remainder trusts haven’t qualified. Some were attempts at unitrusts or annuity trusts, but didn’t quite meet—or flagrantly missed—the qualification requirements of the Internal Revenue Code, the regulations and revenue rulings. Others hadn’t qualified for the applicable charitable deductions (income, gift, estate) and tax-exemption of the trust itself because the troglodyte draftsman didn’t even attempt to create a unitrust or an annuity trust.
The letter ruling that I now discuss, IRS Letter Ruling 201125007, deals with the latter situation. The estate tax charitable deduction and the trust’s tax exemption were saved by a timely reformation. But it took two trips to the courthouse and two trips to the IRS.
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