Foundation Claims Charitable Remainder Trust Guidance Puts Burden on Trustees

Foundation Claims Charitable Remainder Trust Guidance Puts Burden on Trustees

News story posted in Revenue Procedures on 6 June 2005| comments
audience: National Publication | last updated: 18 May 2011


Russell Howes of the University of Wisconsin Foundation has concurred with comments submitted by the American Council of Gift Annuities outlining the adverse effects of recent guidance (Rev. Proc. 2005-24) on the charitable giving community and on trustees in particular.
Full Text:


Russ Howes []

Thursday, May 26, 2005 2:29 PM

To:; Mark.W.Everson@IRS.GOV;


Subject: Revenue Procedure 2005-24

To whom it may concern:

I am respectfully submitting some comments related to Revenue Procedure 2005 -- 24. As you will be able to tell from the tenor of my comments, I would agree completely with the analysis of the American Council on Gift Annuities as presented by Conrad Teitell and many others in the charitable community about the consequences of this particular revenue procedure.

I would focus my comments on the burden that this places on trustees.

I have been working in the field of planned giving for over twenty years at this point and for the last 17 of those years, I have been with a charitable organization that is willing to act as trustee of charitable remainder trusts if the Settlor of the trust wishes us to do so. We try very hard to keep up with these most generous benefactors over the years for many reasons, not the least of which is that they often choose to make additional future gifts to benefit the University.

However, even with all our efforts, I can recall a number of situations where I have turned up at the home of someone and been introduced to their new spouse (who they married several years ago). As a large number of these individuals live in states that have some form of spousal election law, under Rev Proc 2005-24 every one of their trusts would have been disqualified.

We honestly don't know how to handle this problem. We are now considering whether we have to try to send annual questionnaires to all beneficiaries asking for marital status information or try to personally visit with every trust beneficiary every year to ask them about their current status, whether they are planning to move, whether they are planning to marry, etc.

In addition, although the Rev Proc is primarily focused on Charitable Remainder Trusts, we think the same logic really applies to Pooled Income Funds and are having to consider what needs to be done there as well to deal with the hundreds of beneficiaries of those trusts.

Last, I would also note in passing that in all the years that I have been in this field, I have never been involved in a situation where spousal election resulted in any invasion of assets set aside for charity. To many of us in the charitable world, this truly feels like a situation where a cannon is being used to kill a mouse.

For the many reasons cited by the American Council on Gift Annuities correspondence and for the sake of the many worthwhile charitable organizations in this country, I would hope that you might reconsider this particular Revenue Procedure.

Respectfully Submitted,

Russell N. Howes
Vice President for Legal Affairs
and Planned Giving
University of Wisconsin Foundation
1848 University Ave, PO Box 8860
Madison, WI 53708-8860

Phone: (608) 263-0371
Facsimile: (608) 263-0781

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