An estate tax charitable deduction under Code §2055(a) is permitted when a qualified charity first holds an interest in a trust followed by a noncharitable beneficiary, based on actuarial computations, if the lead interest is in the form of a guaranteed annuity (CLAT) or unitrust payment (CLUT). Both Code §2055(e)(2)(B) and Treas. Regs. §20.2055-2(e)(2)(vi) require that for a CLAT, the lead interest must have a specified term of years.
What happens if there is no express term of years for the lead interest, and instead the trust provides for the term to be computed by a formula included in the trust instrument? Is this sufficient?
PLR 201933007 addressed this issue, and held that a formula is sufficient if, as to a testamentary CLAT, the term of years is determinable at the date of death funding based on the formula provided.
PLR 201933007
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