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CHARITABLE REMAINDER TRUSTSamount or unitrust amount with respect to the property passing in trust at thedeath of the decedent begins as of the date of death of the decedent, notwithstandingthe fact that the requirement to pay the amount is deferred. If permittedby applicable local law or authorized by the provisions of the governinginstrument of the trust, the requirement to pay the annuity amount or unitrustamount may be deferred until the end of the tax year of the trust in which completefunding of the trust occurs. 40 Within a reasonable period after that time, thetrust must pay the income beneficiary (in the case of an underpayment) or mustreceive from the income beneficiary (in the case of an overpayment) the differencebetween (1) any annuity amounts or unitrust amounts actually paid, plusinterest on these amounts computed at the appropriate rate of interest 41 compoundedannually; and (2) the annuity amounts or unitrust amounts payable,plus interest on these amounts computed at the appropriate rate of interest compoundedannually. The amounts payable must be retroactively determined byusing the tax year, valuation method, and valuation dates ultimately adopted bythe CRT. 42 The governing instrument of a testamentary CRT must contain rulesconforming to these requirements. 43For purposes of retroactively determining the unitrust amount payable, plusinterest, the governing instrument of a CRUT may provide that the unitrustamount with respect to property passing in trust at the death of the decedent, forthe period that begins on the date of death of the decedent and ends on the earlierof the date of death of the last income beneficiary or the end of the tax year of thetrust in which complete funding of the trust occurs, be computed by a formulacontained in the tax regulations. 44 This alternative is available because, in manycases (for example, in the case of a residuary bequest to a CRUT), the unitrustpayments the beneficiary would have received if the trust had been fully fundedand functioning on the date of death, plus interest, are difficult to calculate. 45The application of the rules concerning the creation of a CRT is illustrated bythe following examples.EXAMPLE 12.1On September 19, 2004, H transferred property to a trust over which he retained an inter vivospower of revocation. The trust was to pay W 5 percent of the value of the trust assets, valuedannually, for her life, with the remainder to charity. The trust would have satisfied all of therequirements of the CRT rules if it had been irrevocable. The trust was not deemed created in2004, however, because H was treated as the owner of the entire trust. On May 26, 2005, H40 Reg. § 1.664-1(a)(5)(i).41 Reg. § 1.664-1(a)(5)(iv).42 Reg. § 1.664-1(a)(5)(i). It is thus clear that this rule is confined to testamentary trusts funded for the first timeafter the grantor’s death; it cannot be used, with respect to an irrevocable trust established and funded by anindividual during his or her lifetime, to excuse noncompliance with the CRT rules during the period precedingthe trustor’s death. See, e.g., Atkinson Estate v. Commissioner, 115 T.C. 26 (2000).43 Rev. Rul. 80-123, 1980-1 C.B. 205.44 Reg. § 1.664-1(a)(5)(ii).45 A sample provision reflecting this formula appears in Rev. Rul. 77-471, 1977-2 C.B. 322. Thereafter, the IRSdetermined that interest should be added to the unitrust amount calculated under this approach, and publishedsample provisions containing that feature. Rev. Rul. 88-81, 1988-2 C.B. 127; Rev. Rul. 82-165, 1982-2 C.B.117. After that, the IRS decided that the model language published in 1988 and 1982 was erroneous, and thatthe provision that appeared in 1977 was correct. Rev. Rul. 92-57, 1992-2 C.B. 123. 412