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Regulation and Compliance > Federal Regulation > IRS

Feds Clarify Trust Rules

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NU Online News Service, April 1, 2005, 9:28 a.m. EST

The Internal Revenue Service has published guidance that affects spousal election rights associated with charitable remainder trusts.[@@]

The guidance gives “safe harbor” protection to taxpayers who want to avoid the disqualification of a CRT because state law gives the surviving spouse of a CRT “grantor” who has died a spousal right of election.

Few taxpayers understand that giving a surviving spouse the right to take a share of a CRT can disqualify the trust, IRS officials write in the guidance.

The IRS will let CRT grantors get around the spousal rights problem for trusts formed on or after June 28 by having spouses waive rights to trust estates.

IRS will help grantors who have started or will start CRTs before June 28 by ignoring state spousal election rights when evaluating CRTs as long as the spouses avoid exercising spousal rights of election, officials say.

The IRS has posted the guidance at //