What are the Different Types of Charitable Remainder Trusts?
An estate planning attorney can help determine the most appropriate trust for your goals and circumstances. A Schwab Charitable Donor Relations Specialist can also help you understand your options so that you’re best prepared for the discussion with your attorney.
We present the following list of CRT variations to assist in your decision-making:
Charitable Remainder Annuity Trusts (CRATs)
A CRAT pays out a fixed dollar payment to income beneficiaries, usually expressed as a percentage of the initial value of the assets donated to the trust. This fixed payment cannot be changed, and no additional contributions to the trust are allowed. CRATs are most appropriate for conservative donors who desire certainty in their income payments.
Charitable Remainder Unitrusts (CRUTs)
A CRUT pays out a fixed percentage (variable dollar) “unitrust payment” to income beneficiaries based on an annual valuation of the trust. Donors can make additional contributions to the trust over time. They are most appropriate for donors who can tolerate income fluctuations and want to participate in any growth in the value of the trust. A number of types of CRUTs exist, including:
 Standard Charitable Remainder Unitrusts (SCRUTs)—the basic Unitrust, as described above.- Net Income Charitable Remainder Unitrusts (NICRUTs or NIMCRUTs)—A NICRUT pays out the lesser of the trust’s net income for that year or the unitrust payment described above (a fixed percentage, determined annually). A NIMCRUT is a NICRUT that also provides for “makeup” payments—like a NICRUT, the recipient receives the lesser of the trust’s net income or the fixed percentage, but the makeup provision states that, in a year where the trust’s net income exceeds the fixed percentage, the excess is used to makeup for previous years in which the net income was less than the fixed percentage.
- Flip Charitable Remainder Unitrusts (FLIPCRUTs)—A FLIPCRUT operates as a NICRUT or NIMCRUT until a certain trigger event occurs (for example, a set date in the future, or the sale of unmarketable assets initially contributed to the trust), after which the trust “flips” to function as a SCRUT. This can be particularly helpful with donations of real estate or other assets which will take time to liquidate.
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