SECTION 5. SAMPLE PROVISION

.01 The following language is the sample provision designed to be used in an inter vivos CRAT for one measuring life:

“The first day of the annuity period shall be the date the property is trans- ferred to the trust and the last day of the annuity period shall be the date of the Recipient’s death or, if earlier, the date of the contingent termination. The date of the contingent termination is the date immediately preceding the payment date of any annuity payment if, after making that payment, the value of the trust corpus, when multiplied by the specified discount factor, would be less than 10 percent of the value of the initial trust corpus. The specified discount factor is equal to [1 / (1 i)] ^t, where t is the time from inception of the trust to the date of the annuity payment, expressed in years and fractions of a year, and i is the interest rate determined by the Internal Revenue Service for purposes of section 7520 of the Internal Revenue Code of 1986, as amended (section 7250 rate), that was used to determine the value of the charitable remainder at the inception of the trust. The section 7520 rate used to determine the value of the charitable remainder at the inception of the trust is the section 7520 rate in effect for [insert the month and year], which is

[insert the applicable section 7520 rate].”

.02 In a testamentary CRAT, the phrase “the property is transferred to the trust” (the first underlined phrase) in this sample language must be replaced with “of my death”.

.03 If the inter vivos or testamentary CRAT is created using the sample form provided in Rev. Proc. 2003–53, 2003–2 C.B. 230, or Rev. Proc. 2003–57, 2003–2 C.B. 257, respectively, the insertion of this sample provision in place of the second sentence of paragraph 2 of that sample inter vivos form, or in place of the second sentence of paragraph 1 of the sample testamentary form, respectively, will satisfy the requirements of a qualified contingency as described in section 6.03 of each revenue procedure.

.04 If the CRAT annuity is payable consecutively for two measuring lives, the phrase “the Recipient’s death” (the second underlined phrase) in the sample provision must be replaced with “the death of

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the survivor of the Initial Recipient and the Successor Recipient(s)”. See Rev. Proc. 2003–55, 2003–2 C.B. 242, and Rev. Proc. 2003–59, 2003–2 C.B. 268. If the CRAT annuity instead is payable concurrently and consecutively for two measuring lives, the second underlined phrase in the sample provision must be replaced with “the Survivor Recipient’s death”. See Rev. Proc. 2003–56, 2003–2 C.B. 249, and Rev. Proc. 2003–60, 2003–2 C.B. 274.