Consider the following hypothetical situation. A person, called Joe, dies in 2024 with a taxable estate of 20 million dollars. There is no issue of a state estate tax. The terms of his will state that the money put in trust for his two brothers. Each brother will get 2% of the trust each year as long as the brother is alive. If a brother dies then he does not get any more money from the trust. When both brothers have died, the money goes to a qualified charity. How do you calculate the Federal Estate tax for Job? That is, how much of a deduction does his estate get for the money that will be going to charity?

1 Answer 1


That is, how much of a deduction does his estate get for the money that will be going to charity

None, based on the facts presented.

The estate doesn't send any money to charity, all the money from the estate goes to the irrevocable charitable remainder trust(s). See the IRC Sec. 2055.

IRC Sec. 2055(e)(2) could have come into play if the distribution was of at least 5% annually, but that's not the case here.


  • 1
    Strictly speaking there are two separate Charitable Remainder Trusts (more specifically, a Charitable Remainder Unitrust (CRUT), one for each brother. The calculation depends upon the date of the contribution to the trust, since that sets the relevant interest rate for estate tax valuation purposes.
    – ohwilleke
    Commented May 17 at 3:14
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    @ohwilleke the OP clearly states there's one trust for both brothers. The intention is probably to create CRUT(s), but clearly the plan was flawed. This is actually not an uncommon mistake...
    – littleadv
    Commented May 17 at 3:42
  • While it states that there is one trust, the fact that the trust is broken into separate shares and each share terminates upon the respective deaths of the brothers would make is functionally two trusts. But, perhaps I have misunderstood the structure.
    – ohwilleke
    Commented May 17 at 15:35
  • @ohwilleke I don't see that. Each brother gets 2% of the total. Once one brother passes, the other still gets 2% of the total. It's perfectly fine for a single trust to have multiple beneficiaries. Regardless, still not qualified for the 2055(e)(2) treatment, either way.
    – littleadv
    Commented May 17 at 17:03
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    It is also worth pointing out that this is a counterintuitive result, because the size of the ultimate remainder interest payment to the charity in a unitrust with a 2% or 4% payout is larger than the the size of the remainder interest in a unitrust with a 5% payout. The smart move would have been to put 20% of the trust's assets into a qualified CRUT with a 5% per brother per year payout, and then to contribute the other 80% to the charity outright or in a private foundation. One might reform the trust to that structure (which isn't 100% equivalent since the 20% runs out of money sooner).
    – ohwilleke
    Commented May 17 at 17:26

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