Charitable Remainder Unitrust

A charitable remainder unitrust (CRUT) is a charitable trust that can be funded with multiple deposits with the intent to provide variable annual income streams to a non-charitable beneficiary. The CRUT must pay at least 5% of the corpus each year, but the donor can set a higher percent payout less than 50% when the CRUT is drafted. The CRUT value is re-evaluated each year and the new income stream for the year is determined based on the new trust value.

Characteristics of a CRUT:

  • Variable annuity stream to the donor, fixed percentage.
  • Multiple deposits are allowed.
  • Term of the trust must be a life annuity or period certain (20 years or less).
  • Payout must be at least 5% to a maximum of 50% of initial fair market value (FMV).
  • Payment is re-calculated each year based on the FMV of the CRUT.
  • At the end of the term, remainder interest is paid to the charitable beneficiary.
  • The donor receives an income tax deduction from the present value of the remainder interest.