Probate & Trust Law Section Conference Manual ... - Minnesota CLE

. If P wished to leave only part of the account to charity, the
charitable and noncharitable shares should be expressed as
fractions or percentages to avoid triggering income taxation of the
IRD of the account.
4. Gift for a Spouse and a Charity.
a. Testamentary Charitable Remainder Trust (“CRT”).
i. A CRT for S at P’s death – two forms:
a) CRT terms are included in P’s will or revocable
trust and is funded with a nominal amount of other
assets if S survives P.
b) P creates a freestanding “revocable charitable trust”
funded with a nominal amount of cash.
ii.
iii.
iv.
Beneficiary designation for the account names the CRT as
the beneficiary if S survives P and names the charitable
remainder beneficiary as the contingent beneficiary if S
predeceases P.
If S survives P, the CRT receives the retirement account
and makes annual payments to S for life. At S’s death, the
remaining CRT assets are distributed to the designated
charity.
If S predeceases P, at P’s death the retirement account is
distributed to the charity.
v. RMDs. Unless S is more than ten years younger than P and
would otherwise be designated as the sole beneficiary of
the account, designation of the CRT as the primary
retirement account beneficiary will have no effect on
minimum requirement distributions from the account
during P’s life. Treas. Reg. § 1.401(a)(9)-5, A-4(a), A-
4(b).
vi.
Estate taxes. If S survives P, the retirement account is
excluded from P’s taxable estate by a combination of estate
tax marital and charitable deductions for the interests of S
and the charitable remainder beneficiary.
IRC §§ 2055(e)(2)(A), 2056(b)(8). If S predeceases P, the
account passes to the charitable beneficiary and qualifies
for the estate tax charitable deduction.
12