An error in the facts. CRUT is selling assets and as part of the proposed transaction will extend a loan to the BUYER's revocable trust, then forgive the loan indebtness. 1. can the CRUT make this type of loan to the buyer of trust assets 2. can the CRUT forgive repayment of any or all of the loan indebtness

The CRUT can extend credit to an arms length buyer in order to liquidate CRUT assets, but if the extension of credit is to the CRUT grantor or another disqualified person, it would constitute a prohibited transaction. Even if it is to a non-disqualified person, if the terms of the extension of credit (maturity, interest rate, security for repayment, etc.) are not commercially reasonable, the transaction could constitute a breach of the trustee's fiduciary duty.

Now, to the proposed forgiveness of the indebtedness -- what conceivable rationale could a prudent investor have for disposing of an asset without adequate consideration? And if a prudent investor would not do that, then the trustee of a CRUT cannot do it without AT LEAST breaching his/her/its fiduciary duty under state trust law, and perhaps not without engaging in a prohibited transaction. Certainly it would jeopardize (and how!) the CRUT's ability to perform its exempt function to the extent of THAT asset.