- 16 -
if all current payouts from the trust are expressed solely[13] as
a fixed dollar amount or a fixed percentage of the value of the
trust's assets." Id. at 1518; S. Rept. 98-169 (Vol. 1), supra at
733.
Congress thus intended reformation to be available only if
the "creator" of the trust had made a bona fide attempt to comply
with the 1969 Act rules (i.e., the governing instrument as
established by the trust's settlor expressed noncharitable
payouts solely as fixed dollar amounts or a fixed percentage of
the value of the trust's assets) or a judicial proceeding to
reform the trust was commenced within 90 days after the return's
filing.
The estate cobbles together several arguments in an effort
to show that a "qualified reformation" occurred. The estate
argues that the return statement served either to amend the trust
into a CRUT or to signify the trustee's intent to operate the
trust as a CRUT. Furthermore, the estate contends, the trust was
in fact managed in accordance with the requirements for a CRUT,
as the total annual distributions to the noncharitable
beneficiaries were equal to 5 percent of the fair market value of
the trust's assets in each of the years 2001 through 2004.
13 The excerpts from the House and Senate committee reports
are identical, except that the word "solely" does not appear in
the House version.
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