With the high annual operating and administration costs of split-interest trusts
and private foundations, a donor may be looking for an easier planning technique that stops short of handing a check directly to charity.
These trusts made up about 6 percent of all split-interest trusts
Overall, split-interest trusts
averaged approximately $86,000 gross income per return.
The operation of a split-interest trust
typically involves one beneficiary-type (either charitable or non-charitable) receiving payments over a period of time, and then the other beneficiary-type receiving the remaining trust assets.
Of the three types of split-interest trusts
(SITs), trustees of charitable lead trusts continued to be the most likely to file both initial and final returns, with returns for ongoing trusts making up only 86 percent of the CLTs filed.
IRC [section] 6652(c)(2)(C) generally imposes a failure-to-file penalty on split-interest trusts
unless the failure is due to reasonable cause.
Private foundations are defined to include certain split-interest trusts
, such as charitable annuity, lead and unitrusts, if such trusts are not exempt from taxation under Sec.
This article focuses on the information and activities of split-interest trusts
for Filing Year 2008, based on Tax Year 2007 returns and, to a much lesser degree, those from prior tax years.
4947, which dealt with nonexempt trusts, including split-interest trusts
such as the trust involved here, and imposed various restrictions, comparable to those imposed on private foundations in respect of self-dealing, retention of excess business holdings, and the making of speculative investments or taxable expenditures but not including a mandatory income distribution requirement (such as that imposed on a private foundation).
1) End-of-year net asset values reported for split-interest trusts
increased to $115.
While many of these 2005 gifts were given directly, donors also used simple trusts, insurance trusts, split-interest trusts
, and 529-trusts.
The lack of striking change between Filing Years 2005 and 2006 may be attributed, in part, to an absence of new tax law revisions affecting split-interest trusts