Rev. Rul. 76-7

The governing instrument of a valid testamentary trust, within the meaning of applicable local law and, which otherwise complies with all the requirements of section 664 of the Internal Revenue Code of 1954 and the applicable regulations, provides for a specified distribution to a sole income beneficiary. It further provides that the income beneficiary has a special power of appointment whereby the beneficiary may designate the charitable organizations satisfying the requirements in both sections 170(c) and 2055(a) of the Code that are to receive the trust assets remaining upon the death of the beneficiary. To the extent that the income beneficiary does not make effective appointment of the trust assets, the trustee is to irrevocably transfer such assets in equal amounts to designated (in the governing instrument itself) charitable organizations satisfying the requirements in both sections 170(c) and 2055(a).

The regulations provide that a charitable remainder trust may not be subject to a power to invade, alter, amend, or revoke for the beneficial use of a person other than an organization described in section 170(c) of the Code. See sections 1.664-2(a)(4) and 1.664-3(a)(4) of the Income Tax Regulations. Held, the special power of appointment granted to the income beneficiary is not a power that would disqualify an otherwise qualifying charitable remainder trust and, thus, the trust qualifies as a charitable remainder trust under section 664 of the Code and the applicable regulations.

See Rev. Rul. 76-8, this page, which pertains to a similar power as provided in an inter vivos trust.