Where Two Are Better than One

Normally, a charitable remainder trust payable for the life of an individual cannot make payments to a trust for the benefit of that individual [Reg. §1.664-3(a)(5)].  However, the IRS does allow trust payments to be made to a second trust where the individual beneficiary is incompetent (Rev. Rul. 76-270) or “financially disabled,” as defined in Code §6511(h)(2)(A) (Rev. Rul. 2002-20).  This permits parents and grandparents to direct charitable remainder trust payments to be made to special needs trusts that will provide funds that are paid to the beneficiary or for his or her benefit, at the discretion of the trustee, without jeopardizing any governmental benefits to which the individual may be entitled.


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