SECTION 6. ALTERNATE PROVISIONS FOR SAMPLE TESTAMENTARY CHARITABLE LEAD

ANNUITY TRUST

.01 Annuity Period for the Life of One Individual .

(1) Explanation . As an alternative to establishing a CLAT for a term of years, the trust instrument of a testamentary CLAT may

provide for payment of the annuity amount for the life or lives of an individual or individuals. However, only one or more of the following individuals may be used as measuring lives: the decedent’s spouse and an individual who, with respect to all remainder beneficiaries (other than charitable organizations described in § 170 or 2055), is either a lineal ancestor or the spouse of a lineal ancestor of those beneficiaries. A trust will satisfy the requirement that each measuring life is a lineal

2007–29 I.R.B. 106 July 16, 2007

ancestor (or the spouse of a lineal ancestor) of all noncharitable remainder beneficiaries, if on decedent’s date of death there is a less than 15 percent probability that individuals who are not lineal descendants of an individual who is a measuring life will receive any trust principal. The probability must be computed under the applicable tables in § 20.2031–7. Section 20.2055–2(e)(2)(vi)( a ). (2) Instruction for use . Replace the fifth and sixth sentences of paragraph 1, Payment of Annuity Amount, of the sample trust

with the following sentences:

The annuity period is the lifetime of [ designated measuring life ]. The first day of the annuity period shall be the date of my death, and the last day of the annuity period shall be the date of death of [ designated measuring life ].

.02 Apportionment of the Annuity Amount in the Discretion of the Trustee .

(1) Explanation . The trustee of a testamentary charitable lead trust may be granted the power to apportion the annuity payment

from time to time among a class of qualifying charitable beneficiaries. (2) Instruction for use . Replace the first three sentences of paragraph 1, Payment of Annuity Amount, of the sample trust with

the following two sentences:

In each taxable year of the trust during the annuity period, the Trustee shall pay to one or more members of a class comprised of organizations described in §§ 170(c) and 2055(a) (hereinafter, collectively “the Charitable Organization”) an annuity amount equal to [ number representing the annual annuity percentage to be paid to the Charitable Organiza- tion ] percent of the initial net fair market value of all property passing to this trust, as finally determined for federal tax purposes. The Trustee may pay the annuity amount to one or more members of the class, in equal or unequal shares, as the Trustee, in the Trustee’s sole discretion, from time to time may deem advisable.

.03 Annuity Amount as a Specific Dollar Amount .

(1) Explanation . As an alternative to stating the annuity amount as a percentage of the initial net fair market value of the assets

transferred to the trust, the annuity amount may instead be stated as a specific dollar amount. (2) Instructions for use .

(a) Replace the first sentence in paragraph 1, Payment of Annuity Amount, of the sample trust with the following sentence:

In each taxable year of the trust during the annuity period, the Trustee shall pay to [ designated charitable recipient ] an annuity amount equal to [ the stated dollar amount ]. (b) Delete the last sentence in paragraph 1, Payment of Annuity Amount, of the sample trust concerning the incorrect valu ation of trust assets.

.04 Designation of an Alternate Charitable Beneficiary in the Trust Instrument .

(1) Explanation . The sample trust provides that in the event the charitable beneficiary designated in the trust instrument is not

an organization described in §§ 170(c) and 2055(a) at the time any payment is to be made to it, the trustee shall distribute such payments to one or more organizations described in §§ 170(c) and 2055(a) as the trustee shall select. As an alternative, the trust instrument may specifically designate one or more alternate charitable beneficiaries. (2) Instruction for use . Replace the second sentence in paragraph 1, Payment of Annuity Amount, of the sample trust with the

following two sentences:

If [ designated charitable recipient ] is not an organization described in §§ 170(c) and 2055(a) at the time any payment is to be made to it, the Trustee shall instead distribute such payments to [ designated substitute charitable recipient ]. If neither [ designated charitable recipient ] nor [ designated substitute charitable recipient ] is an organization described in §§ 170(c) and 2055(a) at the time any payment is to be made to it, the Trustee shall instead distribute such payments to one or more organizations described in §§ 170(c) and 2055(a) as the Trustee shall select, and in such proportions as the Trustee shall decide, from time to time, in the Trustee’s sole discretion.