On August 22, 2005, the IRS issued eight new Revenue Procedures Addressing the Use of Unitrusts in Charitable Remainder Trusts
These new documents do not change any specific laws, but are a welcome guide for counsel drafting charitable remainder unitrusts. The full text is provided in Revenue Rulings and Procedures in Resources in the Florida Wills & Trusts title. They are briefly summarized as follows:
1. Rev. Proc. 2005-52; 2005-34 IRB 326 One Life Unitrust
2. Rev. Proc. 2005-53; 2005-34 IRB 339 Term of Years Unitrust
3. Rev. Proc. 2005-54; 2005-34 IRB 353 Two Life Separate Property Unitrust
4. Rev. Proc. 2005-55; 2005-34 IRB 367 Two Life Joint or Community Property Unitrust
5. Rev. Proc. 2005-56; 2005-34 IRB 383 Test. One life unitrust
6. Rev. Proc. 2005-57; 2005-34 IRB 392 Test. Term of Years Unitrust
7. Rev. Proc. 2005-58; 2005-34 IRB 402 Test. Two Life Separate Property Unitrust
8. Rev. Proc. 2005-59; 2005-34 IRB 412 Test. Two Life Joint or Community Property Unitrust.
Rev. Proc. Charitable Remainder Trusts: Question 1.
Updated Product Features
General Review of Federal Tax Issues by Carlyn McCaffrey and John C. McCaffrey
In the course of developing Lawgic’s New York Wills & Trusts the authors have consulted extensively with Carlyn McCaffrey and John C. McCaffrey. [For the McCaffreys’ professional biographies see Help > About our authors or the Lawgic web site.] This has led to the addition of new options, clarification of commentary, and the modification of document language primarily in those portions of the program dealing with federal tax issues.
New Option to Specify treatment of an IRD Gift
You may now specify whether income in respect of a decedent will be treated as a pecuniary gift or as a fractional gift. New Question 282.
New Options for Five and Five Provisions
You may now specify a “short form” or “long form” five and five provision. The short form is basically our standard provision from previous releases. The long form allows payments during the year as advancements against an annual amount with provision for adjustments at the end of the year. You may also specify whether or not to delay withdrawal rights for fifteen months after death to avoid interfering with any QTIP election. Questions 332, 336, 408, 412, 506, 510, 550 and 554.
New Option to Specify Trustee Removal Power on Reaching Age
You may now specify whether a single beneficiary for whom a trust has been created shall have the power to remove the trustee upon reaching a certain age. You may also specify that exercise of this power requires the appointment of an Independent Trustee to serve as successor. Questions 776 and 777.
New Option to Defer GRAT Annuity Payments
You may now allow annuity payments to be deferred for up to 105 days. Note that this deferral is permitted by Treas. Reg. §25.2702-3(b)(4), but there is no guidance what impact, if any, such a provision would have on the valuation of the Grantor's retained interest in the GRAT. See Law & Strategy. Question 125.
New Option to specify GRAT Annuity Calculation Method
You may now specify an annuity percentage or use a formula which specifies the total annuity payments as a percentage of the initial FMV of the trust assets. New Questions 127 and 128.
Date of Will Now Appears on Cover Page
If you leave the day of execution unspecified (e.g. “November ___ 2005”) remember to fill in the actual date on the cover page as well as on the signature page at the time of execution.
Question Tag Expanded for “No Spouse or at SS death: Allocate GST?”
The question tag is the abbreviated version of each question which is shown in the navigator and at the top of the screen when the question is viewed. The previous tag was “No Spouse: Allocate GST?” The expanded tag makes clear that this question applies both if there is no spouse and at the death of a surviving spouse. Question 307.
"How To" Expanded for GST Exempt Trusts and Special Trusts
“How To” is the first choice at Question 1. It provides useful instructions and helpful suggestions on many areas of Lawgic use. One of the most frequently consulted options is “Create various trusts on death.” The sections on “GST Exempt Trusts” and “Special Trusts” have been expanded for greater clarity. These clarifications have also been added to “Question Help” at the specific decision points involved. Questions 13, 116 and 478.
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To view those questions that are new in this update, or whose Law & Strategy, choices, or default answers have changed, use the "Up_Oct05" flag file. From inside Lawgic, open any existing answer file; on the Flags menu, click Open Flags, select the appropriate Title (click OK), and next select the "Up_Oct05" flag file (and click OK). To view all flagged questions, click Expand All on the Answers menu and scroll the Navigator. Flagged questions will be indicated with bold text.
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