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A charitable remainder trust (CRT) is a split-interest trust that meets a specific federal tax law definition throughout its term. Errors can occur that cause a split-interest trust not to meet the definition of a CRT. Sometimes mistakes are made that don’t violate the definition of a CRT but nonetheless cause problems. Here’s how you can anticipate and avoid such errors and mistakes.
Three Stages
A CRT has three stages to its existence:
- Drafting. This stage culminates in the execution of a document that serves as the trust instrument.
- Funding. This stage encompasses the transfer of assets to the trust.
- Administrative. This stage commences with the initial funding of the trust and terminates on the final distribution of trust assets.
Things can go wrong in all three stages.
It’s important to note that a CRT comes into existence for federal tax purposes when the trust first receives property (securities, cash, etc.) from the settlor.1 Prior to that time, anything that’s gone wrong, such as a drafting error, is generally fixable assuming local law doesn’t get in the way.
A Matter of Terminology
I use the term “intended CRT” to describe an entity the settlor intends to be a CRT as defined in Internal Revenue Code Section 664. Not all intended CRTs meet this definition. I use the term “CRT” to mean a trust that satisfies the definitional requirements of IRC Section 664.
Drafting Errors and Mistakes
In my experience, I’ve noticed that drafting errors are fairly common. They’re avoidable by adhering closely to CRT templates that the Internal Revenue Service has promulgated.2
Multiple donor error. A common drafting error is an intended CRT provision allowing some party other than the settlor or the settlor’s spouse to make an additional contribution to the trust. Such a contribution likely would cause the intended CRT to be a corporation for federal tax purposes, meaning the intended CRT wouldn’t be a trust and wouldn’t satisfy Section 664.3 I find that this error occurs when the drafter of the intended CRT agreement uses a flawed drafting template stored on the drafter’s computer instead of a template the IRS has created.
Depreciation error. Another drafting error occurs when an intended CRT is to be funded with depreciable property (for example, improved commercial real estate). The IRS has ruled that the governing instrument for such a CRT must contain a depreciation reserve provision.4 I’ve never observed this provision in any intended CRT agreement I’ve reviewed.
Unidentified successor recipient. A third drafting error involves naming an unidentified individual as a successor payout recipient. For example, it’s an error to provide that the donor’s “wife” is to receive the trust payout following the donor’s death without identifying the wife by name.5 That’s because “wife” could be someone else down the road.
Other Common Mistakes
Apart from drafting errors that can disqualify an intended CRT as a CRT, there are trust provisions I call “mistakes.” These don’t undermine Section 664 status but can have adverse consequences.
Loss of marital deduction. One such mistake is for the donor to name both the donor’s spouse and some third party as CRT payout recipients. I call this a mistake if the donor is unaware of the tax consequences of naming the third party, because although naming a third party as a payout recipient doesn’t disqualify the intended CRT as a CRT, it does preclude a gift or estate tax marital deduction for the spouse’s interest in the trust.6
Unthinking use of a safe harbor template. Another drafting mistake is to use one of the IRS’ CRT templates unthinkingly. The templates invite unthinking use because they can be used to create safe harbor CRT agreements. A safe harbor agreement doesn’t necessarily create the best tax outcome for the donor.
For example, all of the IRS’ templates contain a provision that allows the trust remainder to be distributed to an organization described in IRC
Sections 170(c), 2055(a) and 2522(a). Section 170(c) describes the entire universe of charitable organizations for income tax purposes, including private foundations (PFs). Because the federal income tax charitable deduction for a gift to a PF is quite limited compared to the deduction for a gift to a public charity, this template provision can be a trap for the unwary, because if it’s possible for the trust remainder to be distributed to a PF, the donor’s federal income tax charitable deduction for creating the trust will be the same as if the trust was set up specifically to benefit a PF.7
If the donor wishes to benefit a public charity, the governing instrument should restrict distribution of the trust remainder to organizations described in Sections 170(b)(1)(A), 170(c), 2055(a) and 2522(a). Restricting distribution of the trust remainder to Section 170(b)(1)(A) organizations restricts distribution to public charities and ensures that the donor will be allowed the maximum federal income tax charitable deduction for creating the trust.8
Fixing Drafting Errors and Mistakes
There are several ways to deal with drafting errors and mistakes. As to document errors that can undermine an intended CRT’s qualification as a CRT, there’s this provision found in all of the IRS’ CRT templates that allows for correction of the trust instrument:
Limited Power of Amendment. This trust is irrevocable. However, the Trustee shall have the power, acting alone, to amend the trust from time to time in any manner required for the sole purpose of ensuring that the trust qualifies and continues to qualify as a charitable remainder [trust] within the meaning of § 664...of the Code.9
This provision allows the trustee, for example, to amend the trust instrument without having to seek judicial modification to:
- eliminate the possibility that a third party will make an additional contribution to the trust,
- add a necessary provision to establish a depreciation reserve, or
- add language to identify a payout beneficiary whose identity is unclear in the original trust instrument.
Note carefully that this provision doesn’t apply to mere drafting mistakes, which are mistakes that don’t undermine the trust’s status as a CRT. Other approaches are therefore needed to correct drafting mistakes.
Qualified disclaimer. One such approach is a qualified disclaimer.10 So, for example, if Husband creates a CRT that’s to make payments to named Wife for life and then to named Brother-in-law for life if he survives Wife, Brother-in-law may be able to make a qualified disclaimer of his interest in the trust, thereby salvaging a marital deduction for Wife’s interest in the trust.11
Judicial modification. Another approach that can work well for correcting drafting mistakes is judicial modification, as illustrated by Private Letter
Ruling 201042012 (July 13, 2010). In this ruling, the donor intended to create a two-life charitable remainder unitrust (CRUT). The donor in fact unintentionally created and funded a one-life CRUT. The donor subsequently petitioned a court for an order amending the trust ab initio. The donor’s petition alleged that modification was warranted because of a scrivener’s error. No one objected to the petition. The court issued the requested order but conditioned the order on the issuance of a ruling from the IRS that the court order wouldn’t cause the trust to be disqualified as a CRT. The IRS ruled that the court order wouldn’t do so.
Funding Stage Errors
One might ask, how can there be funding stage errors? After all, the donor is simply transferring assets to a trust account. But plenty can go wrong, depending on the situation. Here are two situations based on actual intended CRT transactions. I present them as examples of what can go wrong in funding an intended CRT.
Situation #1: Charitable remainder annuity trust (CRAT). Joe,thedonor, age 76, is drawn to the idea of using a rental property to establish a CRAT. Joe likes the idea of a CRAT because it would provide him with predictable income that would replace rental income.
Joe will act as trustee of the CRAT. The charitable remainder beneficiary of the contemplated CRAT recommends that the CRAT also be funded with cash, which is a good idea given the risky nature of funding a CRAT with real estate if the ability of the trust to make the annuity payout depends on the trustee’s ability to convert the real estate to cash within a short time.12
Joe’s lawyer prepares, and Joe executes, a perfectly good CRAT agreement. Joe deeds the rental property to the trust. A week later, Joe transfers $45,000 of cash to the CRAT.
What’s wrong here? No additional contributions can be made to a CRAT.13 The $45,000 cash transfer was an additional contribution, a contribution that disqualified Joe’s trust as a CRAT. If the cash transfer had been made on the day the rental property had been deeded, there wouldn’t be an additional contribution problem.14 Likewise, if the cash transfer had been reversed and undone the day of the transfer, there wouldn’t be a problem. But the cash transfer came to rest for some time before Joe’s attorney became aware of the additional contribution issue. By then, there was no way to solve the problem.
There was a way to have avoided the problem, however: Joe’s attorney could have monitored Joe’s funding of the trust.
Situation #2: CRUT. Judy wants to establish a sizable CRUT using multiple stocks held in her brokerage account at ABC Investment Firm (ABC). The trustee of the CRUT will be XYZ Bank & Trust Company (XYZ).
Judy’s CRUT will be used to benefit LMN Medical Center (LMN), a large and prominent institution in a midwest city. LMN’s law firm prepares a specimen CRUT agreement, which it sends to Judy’s attorney for review and approval. Judy’s attorney reviews and approves the CRUT agreement, as does XYZ.
Judy and XYZ execute the CRUT agreement, and XYZ promptly establishes an account for the CRUT. Judy then sends to her broker at ABC a list of the securities she wants to transfer from her brokerage account to the CRUT account.
A transfer is made from ABC to the CRUT account. XYZ immediately liquidates the securities it’s received into the CRUT account. A few days later, ABC notifies XYZ that ABC transferred the wrong securities. ABC requests that it wants the improperly transferred securities returned.
Long story short: The improper transfer is unwound, a correct transfer is made and a large amount of money is paid to lawyers to clean up the mess. A post-mortem is performed to determine what went wrong, but it fails to provide a satisfactory answer. It becomes clear in retrospect, however, that the improper transfer could have been avoided if Judy’s attorney had closely monitored the transfer.
Lesson learned: These two funding stage situations provide an important lesson, which is that the donor’s attorney should monitor any donor activity affecting a CRT. Such activity includes funding the trust. It also can include administration of the trust.
Donor as Trustee
The administration of a CRT begins when an asset is first transferred to the trust. Because a long trust term may be involved, and because various players (for example, a successor trustee, successor payout recipients, new professional advisors) may enter the picture, there are manifold opportunities for errors to occur in the administration of the trust.
Errors are especially likely to occur if the donor serves as trustee. Reason: A CRT is subject to counter-intuitive tax law requirements that the donor won’t anticipate. The mere fact that the donor has good intuition and has been successful financially will tend to work against the donor in the donor’s role as trustee. Why? Because the donor’s success in life will typically cause the donor, when serving as trustee, to make rational but incorrect assumptions about how the tax law works relative to CRTs.
A donor-trustee may make the common error of incorrect payouts. This may seem to be of no consequence to the donor, but incorrect payouts can cause an intended CRT to fail to meet the definition of a CRT and can violate certain PF excise tax provisions. Lawyers for intended CRT donors act prudently, therefore, in advising their clients not to serve as intended CRT trustees. If the donor nonetheless chooses to serve as trustee, the lawyer should monitor the donor’s actions as trustee to ensure the trust is administered as a CRT strictly according to its governing instrument.
Melvine B. Atkinson
In Estate of Melvine B. Atkinson v. Commissioner,15 the issue was whether Melvine’s estate could take a federal estate tax charitable deduction under Section 2055 for the value of the charitable remainder interest in a CRAT that Melvine established during her life, in which she retained a payout interest for life. The Tax Court held that an estate tax charitable deduction wasn’t allowed. The U.S. Court of Appeals for the 11th Circuit affirmed.
Melvine’s trust was set up and funded as a perfectly good CRAT. The trustee was the attorney who drew up the CRAT. The CRAT was to pay Melvine an annual annuity amount of about $200,000 for her life. There was, however, no record that any annuity amount was ever paid to Melvine.
The trust instrument provided that following Melvine’s death, the annuity amount was to be paid in equal shares to four individual recipients, provided the recipient elected to pay the estate tax on the recipient’s payout interest. None of the recipients elected to pay the tax.16
Tax law analysis. Melvine’sintendedCRT came into existence as a CRT when she transferred about $4 million worth of stock to the trust. The intended CRT failed to continue to satisfy IRC Section 664, however, because the trustee failed to make annuity payments to Melvine. Because of this failure, on Melvine’s death, her intended CRT wasn’t a CRT.
Court’s reasoning. The court focused on IRC Section 2055(e), which provides that: (1) when an interest in a CRT is given to charity, and (2) another interest in the trust passes or has passed to a non-charitable beneficiary, no federal estate tax charitable deduction is allowed with respect to the interest given to charity unless the trust is a CRT as defined in Section 664. Melvine’s intended CRT failed to satisfy Section 2055(e), because interests had passed to the four successor recipients on creation of the trust, and although the trust started out as a CRAT, it failed to function as a CRAT during its administration.
The court commented:
To preserve the estate’s ability to claim a charitable deduction for a remainder interest in property, the trust must not only be set up as a CRAT, but it must also comply with the CRAT statutory requirements from its formation to the final disposition of the trust’s assets.17
This comment makes clear that a trust set up as a CRT will fail to continue to be a Section 664 trust if it’s not administered in conformance with
Section 664. In this situation, the trust isn’t retroactively disqualified ab initio as a CRT. The trust, as it moves forward in time, reaches a point in time when it becomes disqualified as a CRT.18
What would have been the outcome if Melvine hadn’t named the four individuals in question to receive the annuity amount as successor recipients, and the trust had simply terminated in favor of charity on her death? I believe an estate tax charitable deduction would have been allowed, because no interest in the trust would have passed from Melvine to any individual. Melvine’s own interest in the trust wouldn’t have passed from her to her. It was retained by her.
Sample Situation
To grasp more fully the consequences of a split-interest trust’s failure to function as a CRT, it’s useful to consider a specific fact pattern:
Jane, a donor, creates and funds a perfectly good CRAT that’s to make payments to her alone for life and then distribute its assets to a university. Jane claims a federal income tax charitable deduction for creating the CRAT, and the IRS doesn’t disallow the deduction. After a few years, the trustee inexcusably begins failing to make correct payouts to Jane.
Given these facts, IRC Section 4947(a)(2) imposes on Jane’s trust the IRC Section 4941 self-dealing prohibition and the IRC Section 4945 taxable expenditure prohibition. Section 4947(a)(2) thereby makes the trust a PF for purposes of Sections 4941 and 4945.
- The self-dealing prohibition forbids a “disqualified person” as defined in IRC Section 4946 from making use of CRAT assets. Although Jane is a disqualified person, the required CRAT payout to Jane doesn’t violate Section 4941 because Section 4947(a)(2)(A) allows the trust to make its required payout.19
- The taxable expenditure prohibition forbids a CRAT from distributing its assets for non-charitable purposes. But again, the required CRAT payout to Jane doesn’t violate Section 4945 because of Section 4947(a)(2)(A).20
Thus, Section 4947(a)(2) doesn’t cause problems for required CRAT (or CRUT) payouts to the donor. But incorrect payouts not payable under the terms of the trust can violate Sections 4941 and 4945.
Correcting Violations
Self-dealing and taxable expenditure violations due to incorrect payouts generally can be corrected, but there’s a cost in the form of an excise tax in addition to correcting the incorrect payout.
Under Section 4941, the self-dealing excise tax applies to the “amount involved” (defined in Section 4941(e)(2)). It includes an amount that’s improperly paid to a disqualified person. There’s an initial excise tax on the disqualified person equal to 10% on the amount involved. If the violation isn’t corrected within the “taxable period” (defined in Section 4941(e)(1)), there’s an additional tax on the disqualified person equal to 200% of the amount involved. So, for example, if in Year 7, the donor receives $11,000 but should have received only $9,000 from a CRAT the donor established, the amount involved is $2,000, the initial tax is $200 and the additional tax for failure to timely correct is $4,000.
Under Section 4945, there’s an initial tax on the PF equal to 20% of the amount of a taxable expenditure. For failure to timely correct, there’s an additional tax equal to 100% of the amount of the taxable expenditure. So for example, if in Year 7, the donor receives $11,000 but should have received only $9,000 from a CRAT the donor established, there’s a taxable expenditure of $2,000. The initial tax is $400, and the additional tax for failure to timely correct is $2,000. These taxes are imposed on the CRAT.
In these examples, the trustee of the CRAT also may incur an excise tax. A trustee who knowingly participates in an act of self-dealing and then refuses to correct the problem can be liable for an initial tax of up to $20,000 and an additional tax of up to $20,000 for refusal to correct.21 In the case of a taxable expenditure, the trustee can be liable for an initial tax of up to $10,000 and an additional tax of up to $20,000.22
Single vs. multiple violations. A single violation of Section 4941 or Section 4945 shouldn’t disqualify a trust as a CRT if the violation was relatively innocent and was corrected. In my experience, however, I’ve noticed that intended CRT violations of Sections 4941 and 4945 tend to be repeated and inexcusable. Repeated and inexcusable violations not only can cause PF excise tax problems but also can cause the trust to become disqualified as a CRT, as occurred in Melvine Atkinson.
Disqualification of a trust as a CRT. If a CRT subject to Section 4947(a)(2) becomes disqualified as a Section 664 trust, it will remain subject to the PF rules imposed by Section 4947(a)(2) until and unless its PF status is terminated pursuant to IRC Section 507.
Section 507. Section 507 provides four ways PF status can be terminated. Two require payment of a termination tax pursuant to Section 507(c); two don’t. Three ways are voluntary, the fourth is involuntary. Voluntary termination is allowed if there haven’t been:
- willful repeated acts (or failures to act), or
- a single willful and flagrant act (or failure to act) or
- a situation giving rise to liability for tax under Section 4941 or Section 4945.
Involuntary termination can occur if there have been such egregious acts and requires payment of a termination tax.23
Effect of termination. Onthe IRS’ website, there’s a section entitled “Termination of Private Foundation Status,”24 which provides expressly that a Section 507 termination is just a termination of PF status. It’s not the termination of the entity whose PF status is terminated. Nor does termination of PF status terminate pre-existing liability for tax under Section 4941 or Section 4945, given that liability for termination tax under Section 507 is separate and distinct from liability for self-dealing or taxable expenditure violations under Section 4941 or Section 4945.
Termination and CRTs. Termination of PF status is inapplicable to a trust that always meets the requirements of a CRT.25 Involuntary termination can occur, however, if there have been the sort of egregious acts that bring Section 507 into play.
Loss of tax exemption. A CRT is exempt from regular income tax under Section 664(c). If the trust becomes disqualified as a Section 664 trust, however, the trust loses its tax exemption and becomes taxable. On audit of such a trust, the IRS can assess income tax on taxable trust income for open years.
Trust That Never Becomes a CRT
Let’s suppose now that the donor’s trust never becomes a CRT because of an error in drafting the trust instrument or an error in initially funding the trust. Is the donor’s trust subject to
Section 4947(a)(2)? The answer is yes if the donor claimed a federal income tax charitable deduction for creating the trust, and the IRS didn’t disallow the deduction. That’s because Section 4947(a)(2) applies to a split-interest trust if a charitable deduction was allowed with respect to the trust. “Allowed” doesn’t mean “allowable.” It means claimed by a taxpayer and not disallowed by the IRS.26
Advising a CRT Donor
Suppose a lawyer has a client who wants to create a CRT using an inexperienced trustee. The lawyer foresees the possibility that the trustee will make incorrect trust payouts.
The lawyer might advise the client not to claim any charitable deduction with respect to the trust. Not claiming a charitable deduction arguably would allow the client to take the position that Section 4947(a)(2) doesn’t apply to the trust and that therefore incorrect payouts to the client don’t violate Section 4941 or Section 4945.
How sound would this advice be? After all, a well-drafted CRT instrument is going to prohibit violations of Sections 4941 and 4945. I believe the client could still maintain correctly that the trust isn’t subject to Section 4947(a)(2), because Section 4947(a)(2) doesn’t apply to a split-interest trust as to which no charitable deduction is allowed. Moreover, a violation of Sections 4941 and 4945 can occur only if Section 4947(a)(2) applies to the trust, because no other section makes a split-interest trust subject to PF excise tax provisions.
Even so, I believe the best advice the lawyer could give to the client would be to choose a trustee who knows how to administer a CRT.
Incorrect Valuations
A CRT payout may depend on the valuation of trust assets. This is always true for a CRUT and is true for a CRAT if the required CRAT payout is tied to the trust’s initial asset value. The IRS’ templates for CRATs and CRUTs contain provisions that allow the trustee to correct an incorrect payout based on an incorrect asset valuation.
The question arises, does this Section 664 provision allow the trustee to correct an incorrect payout that wasn’t based on an incorrect asset valuation? The incorrect payout may have been made, for example, in utter disregard of the trust’s governing instrument. The answer is clearly no in my view.27
Correction may be made for purposes of Section 4941 or Section 4945, as previously discussed. But because Section 664 is in Chapter 1 of the IRC, and Sections 4941 and 4945 are in
Chapter 42, I see no reason to believe that a Section 4941 or Section 4945 correction cures a Section 664 error.
Flawed CRT: An Ethics Issue
A typical situation. Bob, a donorwho died recently, set up and funded a CRUT in 1999. Bob was trustee of the trust and used his tax advisor to handle trust investing and tax reporting. Bob took distributions irregularly from the trust. These irregular distributions, which were reported on returns filed with the IRS, never conformed to the required unitrust payout. A lawyer representing Bob’s estate has uncovered all this and is asked for advice by Bob’s executor on what to do now that the trust has run its course and is poised to terminate.
Sizing up this situation. Returns filed with the IRS revealed the trust was being mishandled. But the IRS never objected to the mishandling and never audited the trust. This fact suggests to one of the lawyer’s colleagues that this trust can terminate in favor of a local charity and just go away.
The lawyer’s chief concern is that filing a final Form 5227 (CRT return) for the trust may be improper. The lawyer believes the trust became disqualified as a CRUT some years ago, and the lawyer is concerned about filing a Form 5227, given that the trust hasn’t functioned as a CRT. The lawyer’s colleague reminds the lawyer that as far as the IRS is concerned, the trust has been a CRUT throughout its existence. His colleague asks, “Why not let sleeping dogs lie?”
An ethical problem. The colleague is thinking practically and doesn’t share the lawyer’s ethical concern that an attorney shouldn’t advise a client to file a false tax return.
Bottom line. The trust still exists, which means the trust needs to have a trustee appointed. It will be the trustee’s job to file a final return and wind up the trust. Given the lawyer’s ethical concern, the lawyer is well advised to have nothing to do with the trust. The lawyer may need to consult an attorney who’s an ethics expert as to whether, and if so how, the lawyer can continue to advise Bob’s executor.
Endnotes
1. Treasury Regulations Section 1.664-1(a)(4).
2. The templates are contained in a number of Revenue Procedures issued in 2003 and 2005. These can be accessed on the Internal Revenue Service’s website.
3. See Private Letter Ruling 9547004 (Aug. 9, 1995).
4. See, for example, PLR 8931023 (May 23, 1989). There are a number of such PLRs.
5. PLR 7918002.
6. See Internal Revenue Code Section 2056(b)(8)(A). Also see Technical Advice Memorandum (TAM) 8730004 (April 15, 1987). Of course, there’s no mistake if the donor understands the situation and wishes nonetheless to name the third party as a payout recipient. In TAM 8730004, the donor didn’t understand the situation and named the third party as a payout recipient simply on the advice of his lawyer. I know this from talking with a gift officer who worked with the donor.
7. The federal income tax charitable deduction for a gift of cash to a charitable remainder trust is limited under Internal Revenue Code Section 170 to 30% of adjusted gross income if the trust remainder may be distributed to a private foundation. Moreover, no carry-forward is allowed of any contribution amount in excess of the charitable deduction amount. On the other hand, if the remainder may be distributed only to public charities, the 30% limit is increased to 50%, and a 5-year carryforward is allowed.
8. See, for example, Annotation .05 to the template contained in Section 4 of Revenue Procedure 2005-55.
9. See, for example, the template at Section 4 of Rev. Proc. 2005-55.
10. IRC Section 2518.
11. A qualified disclaimer would have fixed the problem in TAM 8730004 (April 15, 1987).
12. IRC Section 664 requires a charitable remainder annuity trust (CRAT) to make its payout like clockwork. The fact that the trustee can’t make the payout because the trustee lacks cash is no excuse.
13. Treas. Regs. Section 1.664-2(b).
14. All property passing to a CRAT by reason of the donor’s death is considered one contribution, even if the property reaches the trustee on different days.
15. Estate of Melvine B. Atkinson v. Commissioner, 309 F.3d 1290 (11th Cir. 2002).
16. One of the recipients sued Melvine’s estate. A settlement ensued, and a 6-figure chunk of money was paid to the recipient out of the trust. This payment wasn’t made pursuant to the governing instrument and was therefore a taxable expenditure for purposes of IRC Section 4945, although the U.S. Court of Appeals for the 11th Circuit didn’t address this issue.
17. Supra note 15, at p. 1294.
18. The tax law doesn’t say what this point in time is. In Atkinson, the 11th Circuit appears not to care.
19. The payment of the annuity or unitrust amount to the donor doesn’t violate the self-dealing or the taxable expenditure prohibition because the annuity or unitrust amount is payable under the terms of the trust:
20. IRC Section 4947(a)(2)(A) provides that the payment doesn’t violate the prohibition.
21. Ibid.
22. IRC Section 4941(c)(2).
23. Section 4945(c)(2).
24. IRC Section 507(a)(2).
25. www.irs.gov/charities-non-profits/private-foundations/private-foundation-termination-tax.
26. See Treas. Regs. Section 53.4947-1(e), Example 3.
27. PLR 201714003 (Dec. 21, 2016).
28. Treas. Regs. Section 1.664-2(a)(1)(iii), which allows the trustee to correct an incorrect CRAT payout, expressly applies only to a payout based on an incorrect determination of the trust’s initial asset value. Treas. Regs. Section 1.664-3(a)(1)(iii), which deals with payouts based on incorrect charitable remainder unitrust asset valuations, is essentially identical.