I was hoping to show how Mitt’s 1996 CRUT (click here to see previous post for background) would have passed the 1997 law change but failing there, I am sadly stunned at how this little blip of dishonest journalism somehow made the rounds throughout the internet. And, sadly, most outlets bought into Bloomberg.com’s skewed journalism.
Well, for the planned giving world, here is how Mitt’s CRUT looks on paper. Assuming a $1 million funding (my guess as it must have been close to that amount) in June 1996, here are the basics of a simple gift illustration that I could pull from Mitt’s public disclosures:
Income beneficiaries: ages 49 and 47
Unitrust rate: 8%
Income tax deduction: $73,590 (7.4% of gift principal – not that far off than the 10% required under 1997 law )
Toss in the 2000 tech stock crash, 2001-02 post 9/11 recession, and the 2008 to present prolonged recession – none of which would have been known in 1996 – no wonder the trust principal has suffered.
Ask yourself this: Did Congress seek to stop this type of gift in 1997? No, Congress was looking to stop Jonathan Blattmachr’s 80% CRUTs and other brilliant push-the-envelope ideas that he was coming up with. Just ask him. Honestly, he is brilliant and we need guys like him to challenge and embarrass the IRS. But, I found it very disingenuous for the article to be quoting him when my guess is that he would probably be rolling in laughter at the thought of an 8% CRUT being an aggressive tax move. Try 80% payout CRUTs and you might get his attention.
The point is this: had Mitt created a 7% CRUT in 1996, he would have been right around passing the 10% rule. But, financial advisors in 1996 would have been telling him to go with 8% or higher because that is what advisors were saying then. It is so obvious that this whole story was cooked up to pin a “tax evasion” smear on Mitt. And, sad that so many picked the story up without questioning its honesty.
By the way, the same 2007 disclosure that Bloomberg.com used to attack Mitt Romney also mentioned that Mitt Romney waived his 2006 governor’s salary. Conveniently, Bloomberg.com failed to report that fact. If you want to see that one for yourself, click here!