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As a tax practitioner, you may have contemplated adding personal financial planning services to your practice. There is a natural progression to go from being your client's most trusted tax advisor to also being their most trusted personal financial advisor. But you have questions: will it be profitable? How do I get started? What are other CPA firms doing? All of these questions are addressed in a new research study published by the AICPA's PFP Section that can show you how to expand your services into this lucrative niche area that is a great compliment to your tax practice.

The Personal Financial Planning Section of AICPA and Moss Adams LLP are pleased to announce the results of their first joint study of CPA financial planning and advisory practices- AICPA/Moss Adams CPA Financial Planning Practice Study.

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Tax Home > Resources > Trust, Estate and Gift > Regulation and Administration > Alert on IRS Requiring Spousal Waivers to Avoid CRT Disqualification
Alert on IRS Requiring Spousal Waivers to Avoid CRT Disqualification
By: Steven A. Thorne, CPA, Deloitte Tax LLP, Chicago, IL, and Vice Chair, AICPA Tax Division’s Trust, Estate and Gift Tax Technical Resource Panel, and Eileen Sherr, CPA, MT, AICPA Tax Division Technical Manager

This alert discusses the IRS recently issued controversial Rev. Proc. 2005-24, which requires spousal waivers to avoid disqualification of certain charitable remainder trusts (CRTs), whether they are charitable remainder annuity trusts or unitrusts. It briefly covers some background on the new rules and urges practitioners to read the guidance.

Rev. Proc. 2005-24 Requires Spousal Waiver to Avoid CRT Disqualification

The IRS recently issued controversial Rev. Proc. 2005-24, requiring spousal waivers to avoid disqualification of certain charitable remainder trusts (CRTs), whether they are charitable remainder annuity trusts or unitrusts.

         

Background

 

Virtually all common law states provide a statutory right to a surviving spouse, allowing him or her to elect to receive a statutory portion of the probate estate of a deceased spouse in lieu of amounts bequeathed to the survivor under the decedent's testamentary plan. Some states have gone further, enacting “augmented share” provisions that allow claims against assets outside the probate estate (such as lifetime gifts or inter vivos trusts). The IRS is concerned that such statutes could result in a surviving spouse having a claim against assets otherwise passing to a charity via a CRT.

 

New Rule

 

Accordingly, Rev. Proc. 2005-24 requires that a spouse affirmatively waive the right to elect against CRT property for all CRTs created after June 27, 2005 in states with augmented share provisions. Existing CRTs can also be affected if a surviving spouse actually exercises a right of election under a state statute.

 

Strategy

 

Rev. Proc. 2005-24 has the potential to put tax advisers at great risk if a waiver is not obtained, as it causes CRT disqualification. AICPA Tax Division members with clients owning or interested in CRTs are encouraged to read the procedure carefully to identify situations in which immediate action may be required. The AICPA Tax Division's Trust, Estate, and Gift Tax TRP's CRT Task Force continues to analyze this procedure and is considering commenting to the IRS.
Copyright © 2005 by the American Institute of Certified Public Accountants, Inc., New York, New York.