SECTION 2. BACKGROUND

When interests in the same property are transferred for both charitable and noncharitable purposes, the charitable interest will qualify for the applicable income, gift, and estate tax charitable deductions only if the interest is in a certain prescribed form. If the charitable interest is a lead interest, §§ 170, 2522, and 2055 of the Internal Revenue Code generally require that the charitable interest be in the form of a guaranteed annuity or unitrust interest.

A charitable lead trust is a trust that pays annually a specified annuity or unitrust amount to one or more charitable beneficiaries for a specified term of years or for the life of a named individual or lives of

certain named individuals. Upon termination of the annuity or unitrust period, the remainder interest passes to, or for the benefit of, one or more noncharitable beneficiaries.

The Internal Revenue Service has not previously issued sample forms for charitable lead trusts.