Application of Rules Relating to Termination of Private Foundation Status
The termination rules do not apply to a charitable or split-interest trust that either (1) pays a beneficiary an amount that is directed by the terms of the governing instrument of the trust and is not discretionary with the trustee or, (2) for a discretionary payment, because of, or after, the last remaining charitable interest in the trust expires.
Example. H creates a nonexempt charitable trust under which the income will be paid for 15 years to R, a section 501(c)(3) organization. After 15 years, the trust will terminate and distribute all its assets to S, another section 501(c)(3) organization. Distribution of the corpus of the trust to S will not be subject to the rules governing termination of private foundation status.
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