Rev. Proc. 2005-24 requires spousal waiver to avoid CRT disqualification.

• Author: Thorne, Steven A.
• Position: Charitable remainder trusts

The IRS recently issued controversial Rev. Proc. 2005-24, requiring spousal waivers to avoid disqualification of certain charitable remainder trusts (CRTs), regardless of whether they are charitable remainder annuity trusts or unitrusts.

Background

Virtually all common law states provide a statutory right to a surviving spouse, allowing him or her to elect to receive a statutory portion of the probate estate of u deceased spouse in lieu of amounts bequeathed to the survivor under the decedent's testamentary plan. Some states have gone further, enacting "augmented share" provisions that allow claims against assets outside the probate estate (such as lifetime gifts or inter virus trusts). The IRS is concerned that such statutes could result in a surviving spouse having a claim against assets otherwise passing to a charity via a CRT.

New Rule

Accordingly, Rev. Proc. 2005-24 requires u spouse to affirmatively waive the right to elect against CRT property for all CRTs created after June 27, 2005 in states with augmented share provisions. Existing CRTs can also be...