Patching Up Mucked Up CRTsPatching Up Mucked Up CRTs

Why are some charitable remainder trusts (CRTs) mucked up?

Even though CRTs (unitrusts and annuity trusts) have been around for almost a half century (since passage of the Tax Reform Act of 1969 (TRA 69)), for troglodyte practitioners, a small minority, the existence of this “new” law’s requirements aren’t in sight. (“High Speed Overview,” p. 22, explains the various types of CRTs.)  

But even Homer nods. Not even the most vigilant and expert practitioners are immune from error. The numerous rules are complicated, and foot faults can be punishable by loss of income, gift and estate tax charitable deductions. Side effects can include taxation of capital gains and loss of marital deductions. And, the unfortunate draftsman can suffer from dr...