A New Caution for Advisors Using CRATs
Action Required: Review existing client CRAT structures to ensure they do not fall under the new IRS 'listed transaction' definitions and consult with tax counsel.
The IRS has issued final regulations designating certain charitable remainder annuity trust (CRAT) schemes as 'listed transactions,' meaning they are now officially classified as tax avoidance schemes. Financial advisors utilizing or recommending these structures must immediately review their client portfolios to ensure compliance and avoid potential penalties associated with these abusive tax shelters.
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