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Bob Parrish C PA. P.C.
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Charitable
Remainder Trust Compliance |
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Telephone — Simply to Help —Helping You
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DEADLINE
EXTENDED FOR REFORMATIONS OF CHARITABLE REMAINDER UNITRUSTS The
IRS extended the deadline for reforming charitable remainder unitrusts
containing impermissible flip provisions from June 8, 1999, to June 30,
2000, and clarified that reformation can be accomplished by a
non-judicial process as long as it is completed by this date. Notice
99-31, 1999-23 I.R.B.
__. Final
regulations issued last December allow the governing instrument of a
CRUT to provide that the unitrust amount is computed using one of
several income exception methods during an initial period and thereafter
is computed using the fixed percentage method. The amendments to the
final regulations will be effective December 10, 1998. CRUTs created
before December 10, 1998, were
not supposed to include this kind of "flip" provision,
although some flip CRUTs had in fact been created before this date. The
final regulations as issued permitted reformations of CRUTs containing
impermissible flip provisions, as well as reformations of other CRUTs to
include flip provisions, if the trustee begins legal proceedings to
reform by June 8, 1999. In
response to practitioner comments that they needed additional time to
begin legal proceedings, the IRS has announced that it will amend the
final regulations to extend the June 8, 1999, deadline to June 30, 2000.
The regulations will also clarify that legal proceedings for this
purpose include
non-judicial reformations that are valid under state law, but that these
reformations must be completed (rather than begun) by June 30, 2000.
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