'Vulture' Trust Regulations: Hold the Valedictory?

Posted: 27 Dec 2000

See all articles by Melanie Schnoll-Begun

Melanie Schnoll-Begun

Salomon Smith Barney, Inc., U.S. - Philanthropic Services

Andrew Grumet

Herrick, Feinstein LLP - NY; Herrick, Feinstein LLP - NJ


The Tax Reform Act of 1969, which imposed certain requirements on donors when establishing charitable lead trusts as a prerequisite for donors to receive charitable deductions, was enacted, to ensure that the amounts in which donors received as a charitable deductions correlated with the amounts received by charities. In recent years, planners have found that using a seriously ill person as the measuring life for the lead interest could artificially inflate the valuation of the amount passing to charity and thus obtain larger charitable deductions. These trusts are commonly referred to as "Vulture Trusts". While most people agree that new legislation is needed to curb this abuse, the manner in which the Internal Revenue Service has selected to do so merely places a band-aide on the problem while leaving the opportunity for many planners to continue to implement Vulture Trusts. As a result of this band-aide approach, many individuals with truly philanthropic goals will now be prohibited from establishing charitable lead trusts using a person's life as the measuring term. If the Service is to give any meaning to Congress' legislative intent, changes should be made to the definition of what will qualify as a "guaranteed annuity interest" and a "unitrust interest".

Suggested Citation

Schnoll-Begun, Melanie and Grumet, Andrew, 'Vulture' Trust Regulations: Hold the Valedictory?. Available at SSRN: https://ssrn.com/abstract=241829

Melanie Schnoll-Begun (Contact Author)

Salomon Smith Barney, Inc., U.S. - Philanthropic Services ( email )

388 Greenwich Street, 17th Floor
New York, NY 10013
United States
(212) 816-9359 (Phone)
(212) 816-4806 (Fax)

Andrew Grumet

Herrick, Feinstein LLP - NY ( email )

2 Park Avenue
New York, NY 10016
United States

Herrick, Feinstein LLP - NJ

2 Penn Plaza
Newark, NJ 07105
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics