SERVICE ISSUES MODEL DOCUMENTS FOR CHARITABLE REMAINDER UNITRUSTS.

Rev. Proc. 90-30

SECTION 1. PURPOSE

This revenue procedure makes available five sample forms of trust that meet the requirements for a charitable remainder unitrust as described in section 664(d)(2) of the Internal Revenue Code.

SEC. 2. BACKGROUND

The Internal Revenue Service receives and responds to requests for rulings dealing with the qualification of trusts as charitable remainder trusts and the availability of deductions for contributions made to such trusts. In many of these requests, the trust instruments and charitable objectives are very similar. Consequently, in order to provide a service to taxpayers and to save the time and expense involved in requesting and processing a ruling on a proposed charitable remainder unitrust, this revenue procedure allows taxpayers who make transfers to a trust that substantially follows one of the sample forms of trust contained herein to be assured that the Service will recognize the trust as meeting all of the requirements of a charitable remainder unitrust, provided that the trust operates in a manner consistent with the terms of the instrument creating the trust and provided it is a valid trust under applicable local law.

SEC. 3. SCOPE AND OBJECTIVE

Section 4 of Rev. Proc. 89-20, 1989-1 C.B. 841, provides a sample form of trust for an inter vivos charitable remainder unitrust providing for unitrust payments during one life that meets all of the applicable requirements of section 664(d)(2) of the Code. This revenue procedure amplifies Rev. Proc. 89-20 by providing the following additional sample forms of trust.

Sec. 4 -- Sample Inter Vivos Charitable Remainder Unitrust: Two lives, Consecutive Interests;

SEC. 5 -- Sample Inter Vivos Charitable Remainder Unitrust: Two Lives, Concurrent and Consecutive Interests;

SEC. 6 -- Sample Testamentary Charitable Remainder Unitrust: One Life;

SEC. 7 -- Sample Testamentary Charitable Remainder Unitrust: Two Lives, Consecutive Interests; and

SEC. 8 -- Sample Testamentary Charitable Remainder Unitrust: Two Lives, Concurrent and Consecutive Interests.

In all cases, the termination of the life interests must be followed by distribution of the trust assets to the charitable remainder beneficiary, and the trust must be a valid trust under applicable local law. If the trust provisions are substantially similar to those in one of the samples provided in sections 4 through 8 of this revenue procedure or in section 4 of Rev. Proc. 89-20, the Service will recognize the trust as satisfying all of the applicable requirements of section 664(d)(2) of the Code and the corresponding regulations. A document will be considered to be substantially similar to one of the samples even though, for example, the wording is varied to comport with local law and practice as necessary to create trusts, define legal relationships, pass property by bequest, provide for the appointment of alternative and successor trustees, or designate alternative charitable remaindermen. Moreover, for transfers to a qualifying charitable remainder unitrust, the remainder interest will be deductible under sections 170(f)(2)(A), 2055(e)(2)(A), and 2522(c)(2)(A) for income, estate, and gift tax purposes, respectively, if the charitable remainder beneficiary otherwise meets all of the requirements of those provisions. Therefore, it will not be necessary for a taxpayer to request a ruling on the qualification of a substantially similar trust. A trust that contains substantive provisions in addition to those provided by sections 4 through 8 of this revenue procedure or by section 4 of Rev. Proc. 89-20 (other than provisions necessary to establish a valid trust under applicable local law) or that omits any of these provisions will not necessarily be disqualified but neither will it be assured of qualification under the provisions of this revenue procedure.

SEC. 4. SAMPLE INTER VIVOS CHARITABLE REMAINDER UNITRUST: TWO LIVES, CONSECUTIVE INTERESTS

On this ______________ day of ______________________ , 19 ___ , I, ________________________ (hereinafter referred to as "the Donor"), desiring to establish a charitable remainder unitrust, within the meaning of section 4 of Rev. Proc. 90-30 and section 664(d)(2) of the Internal Revenue Code (hereinafter referred to as "the Code") hereby create the _______________ Charitable Remainder Unitrust and designate ________________ as the initial Trustee. [ALTERNATE OR SUCCESSOR TRUSTEES MAY ALSO BE DESIGNATED IF DESIRED.]

1. FUNDING OF TRUST. The Donor transfers to the Trustee the property described in Schedule A, and the Trustee accepts such property and agrees to hold, manage, and distribute such property of the Trust under the terms set forth in this Trust instrument.

2. PAYMENT OF UNITRUST AMOUNT. In each taxable year of the Trust, the Trustee shall pay to [A LIVING INDIVIDUAL] during his or her lifetime, and after his or her death to [A LIVING INDIVIDUAL] (hereinafter referred to as "the Recipients"), for such time as he or she survives, a unitrust amount equal to [AT LEAST 5] percent of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust (the "valuation date"). The unitrust amount shall be paid in equal quarterly amounts from income and, to the extent that income is not sufficient, from principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for federal tax purposes, the Trustee shall pay to the Recipients (in the case of an undervaluation) or receive from the Recipients (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

3. PAYMENT OF FEDERAL ESTATE TAXES AND STATE DEATH TAXES. The lifetime unitrust interest of the second Recipient will take effect upon the death of the first Recipient only if the second Recipient furnishes the funds for payment of any federal estate taxes or state death taxes for which the Trustee may be liable upon the death of the first Recipient. [THIS PROVISION IS MANDATORY ONLY IF ALL OR A PORTION OF THE TRUST MAY BE SUBJECT TO SUCH TAXES ON THE DEATH OF THE FIRST RECIPIENT.]

4. PRORATION OF THE UNITRUST AMOUNT. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the survivor Recipient's death.

5. DISTRIBUTION TO CHARITY. Upon the death of the survivor Recipient, the Trustee shall distribute all of the then principal and income of the Trust (other than any amount due either of the Recipients or their estates under the provisions above) to ______ (hereinafter referred to as "the Charitable Organization"). If the Charitable Organization is not an organization described in sections 170(c), 2055(a), and 2522(a) of the Code at the time when any principal or income of the Trust is to be distributed to it, then the Trustee shall distribute such principal or income to such one or more organizations described in sections 170(c), 2055(a), and 2522(a) as the Trustee shall select in its sole discretion.

6. ADDITIONAL CONTRIBUTIONS. If any additional contributions are made to the Trust after the initial contribution, the unitrust amount for the year in which the additional contribution is made shall be [THE SAME PERCENTAGE AS IN PARAGRAPH 2] percent of the sum of (a) the net fair market value of the Trust assets as of the valuation date (excluding the assets so added and any income from, or appreciation on, such assets) and (b) that proportion of the fair market value of the assets so added that was excluded under (a) that the number of days in the period that begins with the date of contribution and ends with the earlier of the last day of the taxable year or the date of death of the survivor Recipient bears to the number of days in the period that begins on the first day of such taxable year and ends with the earlier of the last day in such taxable year or the date of death of the survivor Recipient. In the case where there is no valuation date after the time of contribution, the assets so added shall be valued as of the time of contribution.

7.PROHIBITED TRANSACTIONS. The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipients, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d), and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c).

8. TAXABLE YEAR. The taxable year of the Trust shall be the calendar year.

9. GOVERNING LAW. The operation of the Trust shall be governed by the laws of the State of _______ . The Trustee, however, is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations.

10. LIMITED POWER OF AMENDMENT. The Trust is irrevocable. The Trustee, however, shall have the power, acting alone, to amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code.

11. INVESTMENT OF TRUST ASSETS. Nothing in this Trust instrument shall be construed to restrict the Trustee from investing the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of Trust assets.

SEC. 5. SAMPLE INTER VIVOS CHARITABLE REMAINDER UNITRUST: TWO LIVES CONCURRENT AND CONSECUTIVE INTEREST

On this _______ day of _________ , 19 ___ , I, __________ (hereinafter referred to as "the Donor"), desiring to establish a charitable remainder unitrust, within the meaning of section 5 of Rev. Proc. 90-30 and section 664(d)(2) of the Internal Revenue Code (hereinafter referred to as "the Code") hereby create the ________ Charitable Remainder Unitrust and designate _______ as the initial Trustee. [ALTERNATE OR SUCCESSOR TRUSTEES MAY ALSO BE DESIGNATED IF DESIRED.]

1. FUNDING OF TRUST. The Donor transfers to the Trustee the property described in Schedule A, and the Trustee accepts such property and agrees to hold, manage, and distribute such property of the Trust under the terms set forth in this Trust instrument.

2. PAYMENT OF UNITRUST AMOUNT. In each taxable year of the Trust, the trustee shall pay to [A LIVING INDIVIDUAL and [A LIVING INDIVIDUAL] (hereinafter referred to as "the Recipients"), in equal shares during their lifetimes, a unitrust amount equal to [AT LEAST 5] percent of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust (the "valuation date"). Upon the death of the first of the Recipients to die, the survivor Recipient shall be entitled to receive the entire unitrust amount. The unitrust amount shall be paid in equal quarterly amounts from income and, to the extent that income is not sufficient, from principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for federal tax purposes, the Trustee shall pay to the Recipients (in the case of an undervaluation) or receive from the Recipients (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

3. PAYMENT OF FEDERAL ESTATE TAXES AND STATE DEATH TAXES. The lifetime unitrust interest of the survivor Recipient will continue in effect upon the death of the first Recipient to die only if the survivor Recipient furnishes the funds for payment of any federal estate taxes or state death taxes for which the Trustee may be liable upon the death of the first Recipient to die. [THIS PROVISION IS MANDATORY ONLY IF ALL OR A PORTION OF THE TRUST MAY BE SUBJECT TO SUCH TAXES ON THE DEATH OF THE FIRST RECIPIENT TO DIE.]

4. PRORATION OF THE UNITRUST AMOUNT. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the survivor Recipient's death.

5. DISTRIBUTION TO CHARITY. Upon the death of the survivor Recipient, the Trustee shall distribute all of the then principal and income of the Trust (other than any amount due either of the Recipients or their estates under the provisions above) to ________ (hereinafter referred to as "the Charitable Organization"). If the Charitable Organization is not an organization described in sections 170(c), 2055(a), and 2522(a) of the Code at the time when any principal or income of the Trust is to be distributed to it, then the Trustee shall distribute such principal or income to such one or more organizations described in sections 170(c), 2055(a), and 2522(a) as the Trustee shall select in its sole discretion.

6. ADDITIONAL CONTRIBUTIONS. If any additional contributions are made to the Trust after the initial contribution, the unitrust amount for the year in which the additional contribution is made shall be [THE SAME PERCENTAGE AS IN PARAGRAPH 2] percent of the sum of (a) the net fair market value of the Trust assets as of the valuation date (excluding the assets so added and any income from, or appreciation on, such assets) and (b) that proportion of the fair market value of the assets so added that was excluded under (a) that the number of days in the period that begins with the date of contribution and ends with the earlier of the last day of the taxable year or the date of death of the survivor Recipient bears to the number of days in the period that begins on the first day of such taxable year and end with the earlier of the last day in such taxable year on the date of death of the survivor Recipient. In the case where there is no valuation date after the time of contribution, the assets so added shall be valued as of the time of contribution.

7. PROHIBITED TRANSACTIONS. The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipients, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d), and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c).

8. TAXABLE YEAR. The taxable year of the Trust shall be the calendar year.

9. GOVERNING LAW. The operation of the Trust shall be governed by the laws of the State of _______ . The Trustee, however, is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations.

10. LIMITED POWER OF AMENDMENT. The Trust is irrevocable. The Trustee, however, shall have the power, acting alone, amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code.

11. INVESTMENT OF TRUST ASSETS. Nothing in this Trust instrument shall be construed to restrict the Trustee from investing the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of Trust assets.

SEC. 6. SAMPLE TESTAMENTARY CHARITABLE REMAINDER UNITRUST: ONE LIFE

All the rest, residue, and remainder of my property and estate, real and personal, of whatever nature and wherever situated, [ALTERNATIVELY, IF NOT A RESIDUARY BEQUEST, DESCRIBE OR IDENTIFY THE BEQUEST] I give, devise, and bequeath to my Trustee in trust. It being my intention to establish a charitable remainder unitrust within the meaning of section 6 of Rev. Proc. 90-30 and section 664(d)(2) of the Internal Revenue Code (hereinafter referred to as "the Code"), such Trust shall be known as the ________ Charitable Remainder Unitrust and I hereby designate ______ as the initial Trustee. [ALTERNATE OR SUCCESSOR TRUSTEES MAY ALSO BE DESIGNATED IF DESIRES.]

1. PAYMENT OF UNITRUST AMOUNT. In each taxable year of the Trust, the Trustee shall pay to [a living individual] (hereinafter referred to as "the Recipient") during the Recipient's life a unitrust amount equal to [AT LEAST 5] percent of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust (the "valuation date"). The unitrust amount shall be paid in equal quarterly amounts from income and, to the extent that income is not sufficient, from principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for federal tax purposes, the Trustee shall pay to the Recipient (in the case of an undervaluation) or receive from the Recipient (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

2. DEFERRAL PROVISION. The obligation to pay the unitrust amount shall commence with the date of my death, but payment of the unitrust amount may be deferred from such date until the end of the taxable year of the Trust in which occurs the complete funding of the Trust. Within a reasonable time after the end of the taxable year in which the complete funding of the Trust occurs, the Trustee must pay to the Recipient (in the case of an underpayment) or receive from the Recipient (in the case of an overpayment) the difference between: (1) any unitrust amounts actually paid, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 of the Code prescribe for the Trust for such computation for such period; and (2) the unitrust amounts payable, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 prescribe for the Trust for such computation for such period.

3. PRORATION OF THE UNITRUST AMOUNT. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the Recipient's death.

4. DISTRIBUTION TO CHARITY. Upon the death of the Recipient, the Trustee shall distribute all of the then principal and income the the Trust (other than any amount due the Recipient or the Recipient's estate under the provisions above) to _____ (hereinafter referred to as "the Charitable Organization"). If the Charitable Organization is not an organization described in sections 170(c) and 2055(a) of the Code at the time when any principal or income of the Trust is to be distributed to it, then the Trustee shall distribute such principal or income to such one or more organizations described in sections 170(c) and 2055(a) as the Trustee shall select in its sole discretion.

5. ADDITIONAL CONTRIBUTIONS. No additional contributions shall be made to the Trust after the initial contribution. The initial contribution, however, shall consist of all property passing to the Trust by reason of my death.

6. PROHIBITED TRANSACTIONS. The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipient, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d) and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c).

7. TAXABLE YEAR. The taxable year of the Trust shall be the calendar year.

8. GOVERNING LAW. The operation of the Trust shall be governed by the laws of the State of _____. The Trustee, however, is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations.

9. LIMITED POWER OF AMENDMENT. The Trustee shall have the power, acting alone, to amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code.

10. INVESTMENT OF TRUST ASSETS. Nothing herein shall be construed to restrict the Trustee from ivnesting the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of Trust assets.

SEC. 7. SAMPLE TESTAMENTARY CHARITABLE REMAINDER UNITRUST: TWO LIVES, CONSECUTIVE INTERESTS

All the rest, residue, and remainder of my property and estate, real and personal, of whatever nature and wherever situated, [ALTERNATIVELY, IF NOT A RESIDUARY BEQUEST, DESCRIBE OR IDENTIFY THE BEQUEST] I give, devise, and bequeath to my Trustee in trust. It being my intention to establish a charitable remainder unitrust within the meaning of section 7 of Rev. Proc. 90-30 and section 664(d)(2) of the Internal Revenue Code (hereinafter referred to as "the Code"), such Trust shall be known as the _____ Charitable Remainder Unitrust and I hereby designate _____ as the initial Trustee. [ALTERNATE OR SUCCESSOR TRUSTEE MAY ALSO BE DESIGNATED IF DESIRED.]

1. PAYMENT OF UNITRUST AMOUNT. In each taxable year of the Trust, the Trustee shall pay to [a living individual] during his or her lifetime, and after his or her death to [a living individual] (hereinafter referred to as "the Recipients"), for such time as he or she survives, a unitrust amount equal to [AT LEAST 5] percent of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust ("the valuation date"). The unitrust amount shall be paid in equal quarterly amounts from income and, to the extent that income is not sufficient, from principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for federal tax purposes, the Trustee shall pay to the Recipients (in the case of an undervaluation) or receive from the Recipients (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

2. DEFERRAL PROVISION. The obligation to pay the unitrust amount shall commence with the date of my death, but payment of the unitrust amount may be deferred from such date until the end of the taxable year of the Trust in which occurs the complete funding of the Trust. Within a reasonable time after the end of the taxable year in which the complete funding of the Trust occurs, the Trustee must pay to the Recipients (in the case of an underpayment) or receive from the Recipients (in the case of an overpayment) the difference between: (1) any unitrust amounts actually paid, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 of the Code prescribe for the Trust for such computation for such period, and (2) the unitrust amounts payable, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 prescribe for the Trust for such computation for such period.

3. PRORATION OF THE UNITRUST AMOUNT. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the survivor Recipient's death.

4. DISTRIBUTION TO CHARITY. Upon the death of the survivor Recipient, the Trustee shall distribute all of the then principal and income of the Trust (other than any amount due either of the Recipients of their estates under the provisions above) to _____ (hereinafter referred to as "the Charitable Organization"). If the Charitable Organization is not an organization described in sections 170(c) and 2055(a) of the Code at the time when any principal or income of the Trust is to be distributed to it, then the Trustee shall distribute such principal or income to such one or more organizations described in sections 170(c) and 2055(a) as the Trustee shall select in its sole discretion.

5. ADDITIONAL CONTRIBUTIONS. No additional contributions shall be made to the Trust after the initial contribution. The initial contribution, however, shall consist of all property passing to the Trust be reason of my death.

6. PROHIBITED TRANSACTIONS. The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipient, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d), and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c).

7. TAXABLE YEAR. The taxable year of the Trust shall be the calendar year.

8. GOVERNING LAW. The operation of the Trust shall be governed by the laws of the State of _____. The Trustee, however, is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations.

9. LIMITED POWER OF AMENDMENT. The Trustee shall have the power, acting alone, to amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code.

10. INVESTMENT OF TRUST ASSETS. Nothing herein shall be construed to restrict the Trustee from ivnesting the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of Trust assets.

SEC. 8. SAMPLE TESTAMENTARY CHARITABLE REMAINDER UNITRUST: TWO LIVES, CONCURRENT AND CONSECUTIVE INTERESTS

All the rest, residue, and remainder of my property and estate, real or personal, of whatever nature and wherever situated, [ALTERNATIVELY, IF NOT A RESIDUARY BEQUEST, DESCRIBE OR IDENTIFY THE BEQUEST] I give, devise, and bequeath to my Trustee in trust. It being my intention to establish a charitable remainder unitrust within the meaning of section 8 of Rev. Proc. 90-30 and section 664(d)(2) of the Internal Revenue Code (hereinafter referred to as "the Code"), such Trust shall be known as the _____ Charitable Remainder Unitrust and I hereby designate _____ as the initial Trustee. [ALTERNATE OR SUCCESSOR TRUSTEES MAY ALSO BE DESIGNATED IF DESIRED.]

1. PAYMENT OF UNITRUST AMOUNT. In each taxable year of the Trust, the Trustee shall pay to [a living individual] and [a living individual] (hereinafter referred to as "the Recipients"), in equal shares during their lifetimes, a unitrust amount equal to [AT LEAST 5] percent of the net fair market value of the assets of the Trust valued as of the first day of each taxable year of the Trust (the "valuation date"). Upon the death of the first of the Recipients to die, the survivor Recipient shall be entitled to receive the entire unitrust amount. The unitrust amount shall be paid in equal quarterly amounts from income and, to the extent that income is not sufficient, from principal. Any income of the Trust for a taxable year in excess of the unitrust amount shall be added to principal. If for any year the net fair market value of the Trust assets is incorrectly determined, then within a reasonable period after the value is finally determined for federal tax purposes, the Trustee shall pay to the Recipients (in the case of an undervaluation) or receive from the Recipients (in the case of an overvaluation) an amount equal to the difference between the unitrust amount properly payable and the unitrust amount actually paid.

2. DEFERRAL PROVISION. The obligation to pay the unitrust amount shall commence with the date of my death, but payment of the unitrust amount may be deferred from such date until the end of the taxable year of the Trust in which occurs the complete funding of the Trust. Within a reasonable time after the end of the taxable year in which the complete funding of the Trust occurs, the Trustee must pay to the Recipients (in the case of an underpayment) or receive from the Recipients (in the case of an overpayment) the difference between: (1) any unitrust amounts actually paid, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 of the Code prescribe for the Trust for such computation for such period; and (2) the unitrust amounts payable, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under section 664 prescribe for the Trust for such computation for such period.

3. PRORATION OF THE UNITRUST AMOUNT. In determining the unitrust amount, the Trustee shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the survivor Recipient's death.

4. DISTRIBUTION TO CHARITY. Upon the death of the survivor Recipient, the Trustee shall distribute all of the then principal and income of the Trust (other than any amount due either of the Recipients of their estates under the provisions above) to _____ (hereinafter referred to as "the Charitable Organization"). If the Charitable Organization is not an organization described in sections 170(c) and 2055(a) of the Code at the time when any principal or income of the Trust is to be distributed to it, then the Trustee shall distribute such principal or income to such one or more organizations described in sections 170(c) and 2055(a) as the Trustee shall select in its sole discretion.

5. ADDITIONAL CONTRIBUTIONS. No additional contributions shall be made to the Trust after the initial contribution. The initial contribution, however, shall consist of all property passing to the Trust be reason of my death.

6. PROHIBITED TRANSACTIONS. The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the Code. Except for the payment of the unitrust amount to the Recipient, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d), and shall not make any taxable expenditures, as defined in section 4945(d). The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c).

7. TAXABLE YEAR. The taxable year of the Trust shall be the calendar year.

8. GOVERNING LAW. The operation of the Trust shall be governed by the laws of the State of _____. The Trustee, however, is prohibited from exercising any power or discretion granted under said laws that would be inconsistent with the qualification of the Trust under section 664(d)(2) of the Code and the corresponding regulations.

9. LIMITED POWER OF AMENDMENT. The Trustee shall have the power, acting alone, to amend the Trust in any manner required for the sole purpose of ensuring that the Trust qualifies and continues to qualify as a charitable remainder unitrust within the meaning of section 664(d)(2) of the Code.

10. INVESTMENT OF TRUST ASSETS. Nothing herein shall be construed to restrict the Trustee from ivnesting the Trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale of disposition of Trust assets.

SEC. 9. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 89-20 is amplified.

SEC. 10. EFFECTIVE DATE

This revenue procedure is effective on and after June 18, 1990, the date of publication of this revenue procedure in the Internal Revenue Bulletin.

DRAFTING INFORMATION

The principal author of this revenue procedure is John McQuillan of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure, contact John McQuillan on (202) 377-6356 (not a toll-free call).