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| TYPES OF CHARITABLE REMAINDER TRUSTS One of the most flexible instruments in all estate planning is the Charitable Remainder Trust. When a donor uses this trust, he deposits some asset into the trust and he generally receives the income for one or more lives. At the end of those lives, the charity, or charities, receive the remainder. Thus, the CRT is known as a "Split Interest" trust. There are two interests. The income interest and the charitable interest. When properly and judiciously drafted and administered, the CRT can benefit both interests. It can be beneficial to both the income beneficiaries and to the charitable cause (s). There are two basic kinds of CRT's. One pays a fixed income to the income beneficiaries; the other pays a variable income. When it pays a fixed income, it is called a Charitable Remainder Annuity Trust (CRAT). When designed to pay a variable income, the CRT is called a Charitable Remainder Unitrust (CRUT). Again, the CRAT is fixed. The CRUT is variable. Generally, the CRAT is used for older income beneficiaries who want to be able to plan on a fixed amount of income each year for the rest of their lives. On the other hand, younger donors, being aware that inflation could, over a period of years, erode the value of a fixed dollar amount, usually choose the CRUT. Because the income stream is variable, they would hope and plan for the variability to change on the positive side. In other words, they would hope that the trust corpus would grow and that the income stream would grow. By designing the CRUT wisely and by administering it judiciously, the Trustee can fit the income stream to the needs of the income beneficiaries. Hopefully, he can invest the corpus well and create the desired growth so that the income stream will increase each year ... and that it will out-pace inflation. To learn more about CRUT's, see Types of Charitable Remainder Unitrusts. To include our cause in your CRT, just tell your attorney to designate "The Foundation" as a remainder beneficiary. |
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