Caution: Be sure to follow the terms of your charitable trust
- Caution: Be sure to follow the terms of your charitable trust
- March 1, 2001
- Area(s) of Practice:
- Estate Planning & Administration, Tax Law
Contributions to charitable remainder trusts are generally partially deductible for income tax purposes. These trusts are also usually income tax exempt. A good trust document is essential in order to obtain these tax benefits, but the trust also must be properly administered or both of these tax benefits can be lost. The United States Tax Court (Atkinson, 115 T.C. 26 (2000)) recently disqualified a charitable remainder trust that had not been making required annuity distributions to its grantor. Failure to follow the terms of your charitable trust (even if, as in Atkinson, the charity would benefit from the omission) can be very costly. If you are a grantor or beneficiary of such a trust and you have any question in your mind as to whether it is being administered properly, you should discuss your concerns with the attorney who drafted the trust or who is now assisting you with its administration.