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the gift.” On January 29, 1999, Mrs. Roark passed away. The
Roarks’ daughter, Connie R. Perrin, became the successor trustee
of the Roark Trust, and the arrangement continued.
The only problem was that the Roarks were far from alone;
split-dollar agreements had become so widespread that Congress
stepped in. In February 1999, bills were introduced in both the
Senate and the House to force charities to pay a 100-percent
excise tax on any amounts they had paid on life insurance
policies covering their donors. Because of the possibility that
the legislation would be made retroactive to the date it was
introduced,6 NCF stopped making payments on all the split-dollar
agreements it had. As a result, NCF never made a premium payment
corresponding to Roark’s last $20,000 contribution.
Once NCF stopped paying premiums, its death benefit in the
Roark policy was fixed under the Plan Agreement at $489,000. As
IDS Life was continuously earning the accelerated payments,
however, the amount of money that NCF stood to get if the policy
were terminated began to shrink. And once IDS Life earned all of
the accelerated payments, NCF’s $489,000 interest would
disappear.
NCF faced similar problems with the other split-dollar
6 The legislation passed, and can now be found in section
170(f)(10). Tax Relief Extension Act of 1999, Pub. L. 106-170,
sec. 537, 113 Stat. 1936. Parts of it were indeed made
retroactive to Feb. 8, 1999, the date of introduction.
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Last modified: May 25, 2011