Adding Charitable Remaindermen

Adding Charitable Remaindermen

Forum topic posted in Forum on 1 June 2010| 3 comments
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Joined: 02/14/2005
Points: 60
Has anyone seen a CRUT document that designates one charitable remainderman, but permits the donor to add (not substitute) one or more additional remaindermen at a later date? Are there other issues to consider if this provision is included?

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Joined: 01/07/2009
Points: 30
Adding Charitable Remaindermen
I have seen CRT documents which allow the Trustee discretion to add or remove charitable remaindermen. The donor cannot be allowed to have any influence on the CRT after the gift is complete. If the donor serves as Trustee, they can be allowed to change remaindermen in that capacity but not as donor. James S. Hohn Planned Giving Resources
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Joined: 01/20/2004
Points: 20
Charitable Remaindermen
Here is a sample of what we have used. We also allow the Settlor to retain the right to change the Trustee. 4. DISTRIBUTION TO REMAINDERMEN 4.1 Outright Distribution of Trust Estate Upon the termination of this Trust, the Trustee shall distribute the remaining assets of the Trust Estate, including principal and accumulated income, outright and free of trust, to MEMORIAL MEDICAL CENTER FOUNDATION ( hereinafter referred to as the "Charitable Remainderman"). This designation shall be irrevocable as to twenty-five percent (25%) of the remainder. 4.2 Designation of Charitable Remainderman The Settlor shall have the power to designate, as to seventy-five percent (75%) of the remainder interest of this Trust, in the last writing delivered to the Trustee during the Settlor's lifetime, or, if there be no writing, by special power of appointment in the last executed Will of the Settlor referring specifically to this power, in lieu of or in addition to MEMORIAL MEDICAL CENTER FOUNDATION, another organization or organizations satisfying the requirements of Sections 170(c), 170(b)(1)(A), 2055(a) and 2522(a) of the Code as the recipient(s) of up to said seventy-five percent (75%) interest in the remainder, and in exercising this special power, the Settlor shall determine the share of such portion of the Trust Estate each charitable organization shall receive. 4.3 Remainderman Must Be Qualified Organization If any Charitable Remainderman is not an organization described in Sections 170(c), 170(b)(1)(A), 2055(a) and 2522(a) of the Internal Revenue Code of 1986 (the "Code"), or their successors, at the time a distribution is required to be made to it, then the Trustee shall distribute the Trust Estate designated for such Charitable Remainderman to one or more other organizations described in those sections, and in such shares, as the Trustee, in its sole and absolute discretion, shall determine.
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Joined: 10/14/2004
Points: 110
Adding Charitable Remaindermen
That's pretty much standard, boilerplate language in a CRT. Donor reserves the right to change the charitable beneficiary by adding, deleting, substituting -- so long as the remainder beneficiary is a bona fide charity or charities. One issue is if you want the higher deduction (50/30) at the beginning, the remainder beneficiary has to be limited to public charities, and exclude private foundations. Also, if the current designated remainder charity happens also to be the current trustee, they might not want to be trustee if they are not going to be the remainderman. No fair letting Charity A do all the work while the donor is living, and then give the money to Charity B when donor dies. That would be not cool. If it was going to be Charity A 95% and Charity B 5%, Charity A might agree to be Trustee, but they should get a say in it. If a lawyer for the donor prepared the trust, it should be all kinds of flexible, including the power to change the trustee. If a lawyer for the charity prepared the trust, it might be inflexible. A charity likely won't agree to be trustee unless the donor agrees to give up some of that flexibility and guarantee that the charity won't get cut out.
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