A husband and wife established an irrevocable trust of which they were the trustees. The trust was to pay to the couple a joint unitrust amount of 10% of the fair market value of the trust assets, not to exceed the amount of the trust income for that taxable year. If in any year the unitrust amount were decreased to the amount of trust income, that difference could be made up in subsequent years in which trust income exceeded the 10% unitrust amount.

Upon the death of the second spouse to die, the remaining trust assets were to be distributed to certain named charities or to additional or replacement charities as designated by the husband or wife.

The trust qualified as a charitable remainder unitrust (CRUT).

But the couple later separated and commenced divorce proceedings in court. As part of the proceedings, the court ordered the couple to join in a petition to divide the CRUT. The stock of the trust is to be divided evenly between the two trusts, one for the husband and one for the wife. Each new trust will provide that upon the life beneficiary’s death, if the life beneficiary of the other trust is still living, he or she shall become the life beneficiary of the deceased spouse’s trust. All of the other provisions and requirements of the two new trusts will be identical to the those of the original trust.

The IRS ruled that the division will not cause the original trust or the two new trusts to fail to qualify as CRUTs.