Charity Advisor Resource Newsletter - Volume 1.2 2009
Code Section 2642(e)
(e) Special rules for charitable lead annuity trusts
(1) In general
(2) Adjusted GST exemption
(3) Definitions
(4) Coordination with subsection (d)
For purposes of determining the inclusion ratio for any charitable lead annuity trust, the
applicable fraction shall be a fraction÷
(A) the numerator of which is the adjusted GST exemption, and
(B) the denominator of which is the value of all of the property in such trust
immediately after the termination of the charitable lead annuity.
For purposes of paragraph (1), the adjusted GST exemption is an amount equal to the GST
exemption allocated to the trust increased by interest determined÷
(A) at the interest rate used in determining the amount of the deduction under section
2055 or 2522 (as the case may be) for the charitable lead annuity, and
(B) for the actual period of the charitable lead annuity.
For purposes of this subsection÷
(A) Charitable lead annuity trust
The term ãcharitable lead annuity trustä means any trust in which there is a charitable
lead annuity.
(B) Charitable lead annuity
The term ãcharitable lead annuityä means any interest in the form of a guaranteed
annuity with respect to which a deduction was allowed under section 2055 or 2522 (as
the case may be).
Under regulations, appropriate adjustments shall be made in the application of subsection
(d) to take into account the provisions of this subsection.
Jonathan Ackerman, 2002 President of NCPG (now known as Partnership for Philanthropic Planning), represents donors and tax-exempt organizations on a national basis. His advice is often sought by charities in their creation and operation, especially with respect to contributions and other funding opportunities, as well as by families (and their advisors) who desire to integrate philanthropy into their estate plans.