Define: Charitable Remainder Unitrust

A Charitable Remainder Unitrust (CRUT) is a type of trust that allows individuals to donate assets to a charitable organisation while still receiving income from those assets during their lifetime.

When you establish a CRUT, you transfer assets, such as cash, securities, or real estate, into the trust. The trust then pays you or your designated beneficiaries a fixed percentage of the trust’s value each year. After your death or a specified period, the remaining assets in the trust are distributed to the charitable organisation(s) you have chosen.

Establishing a CRUT allows you to receive income from your donated assets, potentially reduce your income and estate taxes, and support a charitable cause or organisation that you care about.

Yes, you can choose any qualified charitable organisation as the beneficiary of your CRUT. However, it is important to ensure that the organisation meets the necessary legal requirements to receive charitable donations.

The income from a CRUT is typically calculated as a fixed percentage of the trust’s value, which is determined annually. The percentage is usually between 5% and 8% and is based on the fair market value of the trust assets.

In most cases, once you have established a CRUT and named a charitable beneficiary, it is difficult to change the beneficiary. However, you may have the option to name a contingent charitable beneficiary in case the primary beneficiary ceases to exist or no longer qualifies as a charitable organisation.

Yes, there are several tax benefits associated with a CRUT. You may be eligible for an income tax deduction in the year you establish the trust, and you can potentially avoid capital gains tax on the sale of appreciated assets that are transferred into the trust.

Yes, a CRUT allows you to receive income for the rest of your life or for a specified period. However, it is important to note that the income you receive may vary each year based on the trust’s value.

In most cases, you cannot contribute additional assets to a CRUT after it is established. However, you may have the option to establish a new CRUT and transfer additional assets into that trust.

After your death or a specified period, the remaining assets in the CRUT are distributed to the charitable organisation(s) you have chosen. The organisation(s) will use the funds for their charitable purposes as outlined in the trust agreement.