charitable remainder trust

(redirected from Split-Interest Trusts)
Also found in: Financial.

charitable remainder trust (Charitable Remainder Irrevocable Unitrust)

n. a form of trust in which the donor (trustor or settlor) places substantial funds or assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift withdrawn) with an independent trustee, in which the assets are to go to charity on the death of the donor, but the donor (or specific beneficiaries) will receive regular profits from the trust during the donor's lifetime. The IRS will allow a large deduction in the year the funds or assets are donated to the trust, and the tax savings can be used to buy an insurance policy on the life of the donor which will pay his/her children the proceeds upon the donor's death. Thus, the donor (trustor) can make the gift to charity, make a return on his/her money and still arrange to make a large gift at death to his/her heirs. The disadvantage is that the assets are permanently tied up or committed.

References in periodicals archive ?
Six months for split-interest trusts filing Form 5227.
4947(a) split-interest trusts and, thus, treated as private foundations subject to the self-dealing rules under Sec.
3,4) Split-interest trusts include three distinct types: charitable remainder trusts, charitable lead trusts, and pooled income funds.
Charitable Distributions by Split-Interest Trusts, by Charity Type Proportions of nearly $3 billion in distributions reported for 2010 on Form 522?
30, 2010 /PRNewswire/ -- With the release of Revenue Ruling 2010-29, the IRS has reduced the interest rate used to value certain split-interest trusts created in December, 2010 to 1.
Of the three types of split-interest trusts (SITs), trustees of charitable lead trusts continued to be the most likely to file either an initial or a final return, with returns for ongoing trusts making up 87.
In addition, for tax years beginning after 2006, trusts that are split-interest trusts described in Sec.
As in prior years, charitable remainder trusts were the most common split-interest trusts, accounting for 93.
Three types of split-interest trusts are sanctioned by the Internal Revenue Code, so the interest passing to the charitable organizations qualifies for the charitable deduction for income, gift, and/or estate tax purposes--charitable remainder trusts, pooled income funds, and charitable lead trusts.
Charitable split-interest trusts are no longer required to file Form 1041-A, Trust Accumulation of Charitable Amounts, sections of which are now incorporated in Form 5227.
While this might be acceptable for the typical family or residuary trust, caution is needed when dealing with split-interest trusts that may be eligible for the marital or charitable deduction.