August 4, 2005 | Read Time: 1 minute
Nonprofit leaders are asking the Internal Revenue Service to revise a new requirement for charitable trusts that are set up by married couples, saying the change unnecessarily complicates giving. The rule, which took effect June 28, requires donors to receive written permission from their spouses before establishing a charitable trust.
Through such trusts, a donor gives cash, stock, real estate, or other assets to a charity, which then invests the gift. In exchange, the charity provides regular payments to the donor, a beneficiary, or both. When the donor and any beneficiaries die, all the assets in the trust are supposed to go to the charity.
But the IRS says that in some cases donors have been able to claim a charitable deduction for the trust without the charity receiving a penny. That’s because some states allow surviving spouses to contest the arrangements and prevent the nonprofit group from getting the money after a donor dies. The new requirement is aimed at preventing that from happening.
Several organizations — including the American Council on Gift Annuities, the American Institute of Certified Public Accountants, and the National Committee on Planned Giving — have asked the IRS to delay the rules change until it can be studied in more detail.
The IRS says it is reviewing comments it has received.
A copy of the regulation, Revenue Procedure 2005-24, is online at http://www.irs.gov/pub/irs-drop/rp-05-24.pdf.
