CHARITABLE REMAINDER UNITRUST (CRUT)
Back to GlossaryDefinition
A trust that provides a payment to the donor (usually for life) equal to a fixed percentage of the trust assets as valued annually. The remainder interest of the trust passes to a named charitable organization.
Summary
A Charitable Remainder Unitrust (CRUT) is a specialized estate planning tool that allows donors to receive income while supporting charity. Think of it as a 'win-win' arrangement: you transfer assets to a trust, receive annual payments based on a percentage of the trust's value (which gets recalculated each year), and when you pass away, the remaining assets go to your chosen charity. Unlike fixed annuities, CRUT payments can fluctuate because they're tied to the trust's performance - if the investments do well, your payments increase; if they decline, your payments decrease.
Usage Context
Essential for understanding estate planning strategies, charitable giving options, trust taxation, and retirement planning. Particularly important when studying advanced tax planning, wealth transfer techniques, and philanthropic planning strategies.
Common Confusions
- Confusing CRUT with CRAT - CRUT payments vary with trust value, CRAT payments are fixed
- Thinking the donor can get the principal back - the assets are irrevocably transferred
- Assuming all charitable trusts work the same way
- Believing the charity gets nothing until the donor dies - they get the remainder only
- Thinking the percentage payout rate changes automatically - it's set when the trust is established
