Charitable Remainder Trust

Trust Establishment

______________________________, referred to as the DONOR, hereby establishes a charitable remainder unitrust pursuant to Revenue Procedure 89-20 and Section 664(d)(2) of the Internal Revenue Code. This trust shall be known as the ______________________________ Charitable Remainder Unitrust, with _________________________ appointed as the INITIAL TRUSTEE.

Transfer of Property

The DONOR transfers to the INITIAL TRUSTEE the following described property:

______________________________________________________

This property is to be held in trust solely for the purposes, and under the terms and conditions, outlined in this agreement.

Unitrust Payments

The Trustee shall distribute to a living individual (the “recipient”) each taxable year, for the duration of the recipient’s life, a unitrust amount equal to no less than five percent of the net fair market value of the trust assets, as determined on the first day of each taxable year (the “valuation date”). These payments shall be made in equal quarterly installments from trust income, or from the principal if income is insufficient.

Governing Law

The trust shall be governed by the laws of the State of ___________________. However, the Trustee shall not exercise any authority that would cause the trust to fail qualification under Section 664(d)(2) of the Internal Revenue Code.

Investment Authority

The Trustee may invest the trust assets in a manner that may reasonably generate income or gains through asset sales or dispositions, consistent with trust objectives.

Excess Income

If trust income exceeds the unitrust amount in any year, the excess shall be added to the trust principal.

Correction of Valuation Errors

If the net fair market value of the trust assets is later determined to have been incorrect, the Trustee shall take the following corrective actions within a reasonable time:

In the case of overpayment due to overvaluation, the Trustee shall recover the excess from the recipient;

In the case of underpayment due to undervaluation, the Trustee shall pay the deficiency to the recipient.

Proration

The unitrust amount shall be prorated on a daily basis in the event of a short taxable year or the recipient’s death during the taxable year.

Distribution Upon Recipient’s Death

Upon the recipient’s death, the Trustee shall distribute the remaining trust corpus, including both principal and interest (excluding any amounts due to the recipient’s estate), to ______________________ (the Charity). If this Charity is not recognized as a qualifying organization under Sections 170(c), 2055(a), and 2522(a) of the Internal Revenue Code at the time of distribution, the Trustee shall instead distribute the funds to another qualifying charitable organization, selected at the Trustee’s sole discretion.

Compliance With Tax Regulations

The trust’s income shall be distributed in a manner that avoids excise taxes under Section 4923 of the Internal Revenue Code. The Trustee shall not engage in any self-dealing, as defined under Section 4941(d), nor shall the Trustee make any taxable expenditures under Section 4945(d), nor make investments that jeopardize the trust’s charitable purpose under Section 4944, nor retain any excess business holdings as described in Section 4943.

Additional Contributions

In the event of any additional contributions, the unitrust amount for that year shall equal five percent of: (a) the net fair market value of the trust assets at the start of the taxable year (excluding the new contribution and related income, appreciation, or gains); plus (b) a proportional value of the new contribution, calculated based on the ratio of the number of days from the date of contribution to the earlier of year-end or the recipient’s death, compared to the total number of days from the start of the year to the earlier of year-end or the recipient’s death. If there is no valuation date after the time of contribution, the added assets shall be valued as of the date of contribution.

Trustee Replacement

The DONOR retains the authority to remove the Trustee and appoint a successor Trustee.

Amendment and Irrevocability

This trust is irrevocable. However, the Trustee retains the authority to amend the trust solely to maintain its qualification as a charitable remainder unitrust under Section 664(d)(2) of the Internal Revenue Code.

Execution

Dated: ________________

__________________________________
DONOR

__________________________________
TRUSTEE

Acknowledgment of Receipt

The Trustee acknowledges receipt of the trust property described above.

Dated: ________________

__________________________________
TRUSTEE

How to Use This Sample Format

This guide is provided to help you understand and complete this standard Charitable Remainder Trust form. Modify or supplement the content as appropriate for your specific situation.

Make multiple signed copies. Provide one to each party who signs. Retain one copy in a secure home location and one in the file associated with the relevant transaction.