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CHARITABLE REMAINDER TRUSTSby the plan, is a 5 percent shareholder 130 of the employer maintaining the plan,the plan is treated as having distributed (at the time of the allocation) to the personor shareholder, the amount so allocated. 131(h) Additional ContributionsA trust is not a CRAT unless its governing instrument provides that no additionalcontributions may be made to it after the initial contribution. For this purpose,all property passing to a CRAT by reason of death of the grantor isconsidered one contribution. 132(i) Minimum Value of Remainder InterestThe value of the remainder interest in a CRAT 133 must be at least 10 percent ofthe initial net fair market value of all property placed in the trust. 134 This 10 percenttest is measured on each transfer to the CRT. Consequently, a CRT thatmeets the 10 percent test on the date of transfer will not subsequently fail tomeet the test if interest rates have declined between the time of creation of thetrust and the death of an individual whose life is a measuring life. Similarly,when a CRT is created for the joint lives of two individuals, with a remainder tocharity, the trust will not cease to qualify as a CRT because the value of the charitableremainder was less than 10 percent of the trust’s assets at the first death ofthese two individuals. 135There are two other rules designed to provide relief for trusts that do notmeet the general 10 percent requirement:1. When a transfer is made to a CRT that fails the 10 percent test, the trust istreated as meeting the 10 percent requirement if the governing instrumentof the trust is changed by reformation, amendment, construction, or otherwiseto meet the requirement by reducing the payout rate or duration,or both, of any noncharitable beneficiary’s interest to the extent necessaryto satisfy the requirement, as long as the reformation or other means ofchange is commenced within the period for reformations of CRTs. 136 Thestatute of limitations applicable to a deficiency of any tax resulting fromreformation of the trust may not expire before the date one year after theIRS is notified that the trust has been reformed. 137130 The term 5 percent shareholder means any person who owns, directly or constructively (IRC § 318(a), appliedwithout regard to the exception in IRC § 318(a)(2)(B)(i)), more than 5 percent of the outstanding stock of thecorporation that issued the qualified employer securities or of any corporation that is a member of the samecontrolled group of corporations (IRC § 409(1)(4)) as the corporation. IRC § 664(g)(5)(B).131 IRC § 664(g)(5)(A).132 Reg. § 1.664-2(b).133 See § 12.11.134 IRC § 664(d)(1)(D).135 H. Rep. No. 105-220, 105th Cong., 1st Sess. 607 (1997).136 These reformation rules (IRC § 2055(e)(3)) are the subject of § 8.7(c).137 H. Rep. No. 105-220, 105th Cong., 1st Sess. 607 (1997). In essence, this rule relaxes the reformation requirementin IRC § 2055(e)(3)(B) to the extent necessary for the reformation of the trust to meet the 10 percent requirement. 426