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CHARITABLE REMAINDER TRUSTScreate an opportunity to transfer property to a family member free of transfertax. A transfer of this nature is contrary to the intent underlying the provisionenacted in 1996.Therefore, the gift tax regulations were amended to provide that the unitrustinterest in a CRUT, using an income-exception method (generally includinga FLIPCRUT), retained by the donor or any applicable family membergenerally is valued at zero when someone other than the donor, the donor’sspouse, or both the donor and the donor’s spouse (who is a citizen of the UnitedStates) is a noncharitable beneficiary of the trust. (This rule does not apply whenthere are only two consecutive noncharitable beneficial interests and the transferorholds the second of the two interests.) In these situations, the value of thedonor’s gift is the fair market value of all the property transferred to the CRUT.The present value of the remainder interest passing to the charitable organizationinvolved will qualify for the gift tax charitable contribution deduction.Accordingly, the amount used to calculate the donor’s gift tax liability is thevalue of the property transferred to the trust less the value of the interest passingto charity. 289This gift tax exclusion continues to exclude transfers to CRATs and SCRUTs(and to pooled income funds) from the application of this body of law. 290(i) Scriveners’ ErrorsAs the varieties of CRTs increase, so too does the opportunity for mistakes in thepreparation of trust documents. Errors can be made by lawyers and other financialplanners who draft documents, and inadvertently insert one or more provisionsthat should not be in the document or fail to include one or moreprovisions that are required to be in the document. (This phenomenon is exacerbatedby prototype forms and word processing, and occasionally by incompetence.)Sometimes there is miscommunication between donors and theiradvisors; donors often fail to understand, or perhaps not even read, the trustdocuments.In one instance, a financial planner, who was advising two prospectivedonors and working with a planned giving specialist at a charitable organization,provided the individuals with illustrations of a SCRUT and a NIMCRUT.The individuals selected a NIMCRUT. The financial planner informed theplanned giving specialist that the couple wanted to establish a charitable remaindertrust; he sent the SCRUT form to the individuals’ lawyer for final preparationof the trust document. These three individuals communicated only by e-mail.The donors executed the SCRUT document. The error was subsequently discoveredby the donors’ accountant. 291 In a comparable circumstance, a trust documentthat was supposed to set up a SCRUT contained a provision causing thetrust to function as a NIMCRUT. 292 Conversely, parties that intended to create aNIMCRUT executed a trust document that was mistakenly prepared as a289 Reg. § 25.2702-1(c)(3)(i).290 See Chapter 13.291 Priv. Ltr. Rul. 200218008.292 Priv. Ltr. Rul. 9804036. 452