(7) While the existence of government-issue CRT forms should have substantially reduced the need for a qualified reformation regime, it appears, at least based on private letter rulings (PLRs) issued in this area, that practitioners continue to draft impermissible split-interest trusts
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
73-29, section 664 trusts, pooled income funds under section 642(c)(5), and all other split-interest trusts
described in section 4947(a)(2) were required to file Form 5227.
Of the three types of split-interest trusts
(SITs), trustees of charitable lead trusts continued to be the most likely to file either an initial or a final return, with returns for ongoing trusts making up 87.1 percent of the CLTs filed.
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.
Interest and taxes remained the smallest deductions reported for split-interest trusts
, in which charitable and noncharitable beneficiaries have interests, can accomplish both purposes.
While the number of CRTs was relatively static at 115,754 in 2007--down slightly from the year before--the value of assets within them was considerable at nearly $96 billion in 2007, an increase of nearly 8% over 2006 ("Split-Interest Trusts
, Filing Year 2007,, IRS Statistics of Income Bulletin, tinyurl.com/ck9s8d).
Figure F Transfer Method Used by All Donors, Taxable and Nontaxable, Gift Year 2008 Direct gifts 69.1% Family trusts  5.9% Simple trusts 3.9% Split-interest trusts
 2.2% Qualified personal residence trusts 2.4% Other trust types  16.4%  "Family trusts" includes children's trusts and bypass trusts.
* Charitable split-interest trusts
are no longer required to file Form 1041-A, Trust Accumulation of Charitable Amounts, sections of which are now incorporated in Form 5227.
While this might be acceptable for the typical family or residuary trust, caution is needed when dealing with split-interest trusts
that may be eligible for the marital or charitable deduction.