Surely No One Dies on Schedule: Split-Interest Gifts and Mortality Tables

Much of our work in planned giving – in particular, with split-interest gift arrangements – involves the use of mortality tables and the related estimates of life expectancy. When calculating the charitable income tax deduction for a split-interest gift, for example, we are required to use specific mortality tables dictated by the IRS. If we wish to estimate the remaining liability for a life-income gift, we must use some type of mortality data. And should we attempt to estimate the ultimate charitable remainder value for a life-income gift, the use of mortality data is critical. But what are the different mortality tables, and when do we choose to use a specific one?

IRS Updates Rules for Computing Planned Gift Deductions

On June 1, 2023, the IRS made public Treasury Decision 9974 (TD 9974). TD 9974 contains final regulations relating to the use of actuarial tables in valuing annuities, interests for life or a term of years in property, and remainder or reversionary interests in property. A change of immediate importance to gift planners, TD 9974 requires use of the 2010CM mortality table when computing the deduction for a gift annuity, charitable remainder trust, or other split-interest gift made on or after June 2, 2023.

New IRS 2010CM Mortality Table Throws a Curveball

We have learned something unexpected about the new 2010CM mortality table. Published in proposed regulations released by the IRS in May, 2010CM can in some situations produce a higher deduction than the 2000CM mortality table we’ve been using since 2009. This is an important realization, because the proposed regulations allow donors to compute their deductions using 2010CM or 2000CM until the IRS publishes final regulations. Naturally, donors will want to use the table that gives them the greatest benefit during this transitional period.

IRS Announces New Mortality Table for Computing Planned Gift Deductions

On May 5, the IRS finally published proposed regulations that update the mortality assumptions used to compute the value of annuity interests, unitrust interests, income interests, and life estates. The updated mortality table, 2010CM, is based on data from the 2010 U.S. Census. The current mortality table, 2000CM, is based on data from the 2000 U.S. Census. It has been 13 years since 2000CM went into effect, despite a Section 7520 requirement that the mortality table for valuing annuity interests, etc. be updated no less than every ten years. Update: On June 1, 2023, the IRS made public final regulations governing the use of 2000CM and 2010CM. The finalized rules are discussed here.