Change in Disclosure Requirements for Names of Split-Interest Trusts

A Price Waterhouse Coopers alert reports that organizations filing Schedule R, Related Organizations and Unrelated Partnerships, will no longer have to disclose the names of split-interest trusts in Part IV of that schedule. Schedule R is part of a charity’s annual tax filing, IRS Form 990 - Return of Organization Exempt From Income Tax.

Previously, an organization that had a related split-interest trust had to include the trust’s name, address, and employer identification number.  This created concerns about donor confidentiality, as many names of charitable trusts include the name of the donor(s), and IRS 990s are open to public inspection. With the change, an organization simply has to report the type of the trust on Schedule R. 

This change is effective beginning with the 2011 tax year.

While this is good news, please note that certain information regarding split-interest trusts will remain public and searchable. This is because of the IRS Form 5227, Split-Interest Trust Information Tax Return, parts of which have been subject to public disclosure for several years now.

Donors might be surprised, some unhappily so, to see their charitable trusts appear when they search for their names in a search engine. A way to avoid this result is to not include the donor name in the name of the trust.

As a part of best gift planning best practices, this is an issue that should be discussed with donors when establishing a charitable trust.