Contents

CHARITABLE REMAINDER TRUSTS§ 12.8 MANDATORY PROVISIONSAs references throughout the foregoing portions of this chapter indicate, thereare a variety of provisions that must appear in a CRT instrument, as a conditionof qualification of the trust under the applicable federal tax rules. Many of theseprovisions are required by the tax regulations. Others are required by variousIRS pronouncements. 384 Following the issuance of these requirements, the IRSpublished prototypes of CRTs. 385 The IRS announced that it ordinarily would notissue rulings as to the qualification of CRTs. 386Nonetheless, when a trust document contains provisions that differ from thesample provisions, the IRS is likely to rule as to whether the differing provisionsdisqualify the trust. 387 For example, the IRS will rule as to the qualification of aCRT when the income interests are measured by three lives. 388 Also, when a courtproposes to modify the provisions of a trust in an effort to qualify it as a CRT, theIRS will rule in advance as to whether the proposed judicial modifications willallow the trust to qualify. 389§ 12.9 PRIVATE FOUNDATION RULESInasmuch as CRTs are split-interest trusts, 390 they are subject to at least some of theprohibitions that are imposed on private foundations, most particularly the rulesconcerning self-dealing 391 and taxable expenditures. 392 Thus, reference to the otherprivate foundation rules is not necessary, 393 although on occasion there are referencesin the trust instrument to the private foundation law prohibitions on excessbusiness holdings 394 and jeopardizing investments. 395 In one instance, a charitableremainder trust was judicially reformed, ab initio, to remove a limitation on excessbusiness holdings; the IRS ruled that the reformation did not adversely affect thequalification of the trust. 396The interplay of the private foundation rules in the CRT context was illustratedby a private letter ruling issued by the IRS concerning a gift of a joint ventureinterest to a CRUT. 397 The donor owned an interest in and to a joint venture,384 Rev. Rul. 72-395, 1972-2 C.B. 340; Rev. Rul. 80-123, 1980-1 C.B. 205; Rev. Rul. 82-128, 1982-2 C.B. 71;Rev. Rul. 82-165, 1982-2 C.B. 117; Rev. Rul 88-81, 1988-2 C.B. 127.385 Rev. Proc. 89-20, 1989-1 C.B. 841; Rev. Proc. 89-21, 1989-1 C.B. 842; Rev. Proc. 90-30, 1990-1 C.B. 534;Rev. Proc. 90-31, 1990-1 C.B. 539; Rev. Proc. 90-32, 1990-1 C.B. 546. Most recently, the IRS provided prototypedeclarations of trust that meet the requirements of forms of CRATs. Rev. Proc. 2003-53, 2003-31 I.R.B.230 through Rev. Proc. 2003-60, 2003-31 I.R.B. 274.386 Rev. Proc. 91-3, 1991-1 C.B. 364, § 4.01(34). This non-ruling position of the IRS is also reflected in Rev. Proc.99-3, 1999-1 I.R.B. 103, § 4.01(16), (38), (43), (45). Prior to that time, the IRS issued rulings as to the qualificationof charitable remainder trusts. See, e.g., Priv. Ltr. Rul. 7842062.387 See, e.g., Priv. Ltr. Rul. 9309029.388 See, e.g., Priv. Ltr. Rul. 9342026.389 See, e.g., Priv. Ltr. Rul. 9309034.390 IRC § 4947(a)(2); Reg. § 53.4947-1(c)(1)(ii). See Private Foundations § 3.7.391 IRC § 4941. See Private Foundations ch. 5.392 IRC § 4945. See Private Foundations ch. 9.393 Reg. §§ 1.508-2(b)(1)(vi), 1.664-1(b).394 IRC § 4943. See Private Foundations ch. 7.395 IRC § 4944. See Private Foundations ch. 8.396 Priv. Ltr. Rul. 9743004.397 Priv. Ltr. Rul. 8536061. 466