At the end of the trust’s lifespan, the remainder of the assets are distributed to the charitable beneficiary. Charitable remainder trusts provide financial security for the donor’s family and support for a predetermined charity.
The two types of these trusts include the Charitable Remainder Annuity Trust (CRAT) and the Charitable Remainder Unitrust (CRUT).
The difference between the two is in their distributions and contributions:
– Charitable Remainder Unitrusts
Charitable Remainder Unitrusts distribute a fixed percentage of the fair market value (FMV) of assets in the trust to the beneficiaries at least once a year for the duration of their lifetime or up to 20 years. The amount fluctuates yearly due to the fair market value for that year. With Charitable Remainder Unitrusts, additional contributions can be made.
– Charitable Remainder Annuity Trusts
Charitable Remainder Annuity Trusts provide a specified dollar amount to be paid out at least once a year to the beneficiaries for the duration of their lifetime or up to 20 years. The amount paid out yearly remains the same regardless of the value of the assets in the trust. With Charitable Remainder Annuity Trusts, additional contributions can not be made.
