The U.S. Patent Office has published a patent application for a system and method for maximizing after-tax income from charitable remainder trusts. According to the application, "An evaluation service establishes a first charitable remainder trust (CRT-1) that generates ordinary income from fixed income investments and a second charitable remainder trust CRT-2 that generates growth income from equity investments."  MORE »

Writing on behalf of the American Council on Gift Annuities, Conrad Teitell has drafted a letter to the Treasury and the IRS to suggest solutions in response to Notice 2008-99 in which the IRS and Treasury announced their interest in a type of transaction involving the sale of interests in a charitable remainder trust that might result in inappropriate tax avoidance by the trust’s grantor.  MORE »

Writing on behalf of the Estate & Gift Taxation Committee of the Association of the Bar of the City of New York, Michael I. Frankel has pointed out inconsistencies in private letter rulings regarding the calculation of income interests for net income charitable remainder unitrusts that propose to terminate early. Some rulings indicate that "one" reasonable method of calculating the actuarial value of the income interest use the lower of the stated percentage distribution rate of the NIMCRUT or the Code § 7520 rate in effect for the month of termination while others use only the Code § 7520 rate in effect for the month of termination. The bar urges IRS to issue guidance that uses the same method that is used to value income interests when a NIMCRUT is created.  MORE »

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The Conrad N. Hilton Foundation has announced that its Chairman, Barron Hilton, is building on the philanthropic legacy of his father by contributing approximately $1.2 billion of proceeds from the sale of Hilton Hotels Corporation and the pending sale of Harrah's Entertainment into a charitable remainder unitrust that will eventually benefit the foundation. Barron Hilton further indicated he plans to ultimately donate 97% of his entire net worth to the foundation on a testamentary basis.  MORE »

In addition to the complex set of Federal income, gift, and estate tax rules that confront the creation, funding, and administration of charitable remainder trusts, a number of states have specific requirements. For example, New York assesses a transfer tax on the sale of real property, a CRT is not exempt from this transfer tax. Pennsylvania and New Jersey do not recognize a CRT as an exempt trust. California assesses a transfer tax on the sale of real property, but does exempt CRTs. And Illinois and Oregon require the registration of a CRT with the state Attorney General's office.  MORE »

When the late New York billionaire hotelier Leona Helmsley's will was made public in Westchester Surrogates Court last week, most of the attention of the press fell on the $12 million Helmsley left in trust for the benefit of her canine companion, Trouble. For charitable gift planners, however, the philanthropic components of her will also made for some interesting reading.  MORE »

Employing a philanthropic venture capital strategy, a charitable remainder unitrust has transferred $24.5 million to a biopharmaceutical company in exchange for a royalty interest in worldwide sales of a drug for the treatment of ALS currently in late-stage development by the company.  MORE »

Thinking about terminating a charitable remainder trust early and dividing the trust between the income recipients and charitable remainderman? You better think twice if the remainderman is a private foundation.  MORE »

'Tis the season to be filing. In this article, Pasadena, California CPA and CRT tax return software developer Temo Arjani and partner Matthew Rayer take us step by step through the preparation of Form 5227 and related schedules for a net income with makeup charitable remainder unitrust (NIMCRUT) and discuss some of the interesting twists that can happen along the way.  MORE »