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| TYPES OF CHARITABLE REMAINDER UNITRUSTS For donors who want a to make a life income gift ... and who would like a variable (hopefully, increasing) stream of income, the Charitable Remainder Unitrust (CRUT) is often the vehicle of choice. The CRUT pays a percentage of the corpus (the body of money), as valued each year, to the income beneficiaries. Thus, with a growing corpus, the trust will pay an increasing income each year. In addition to variability of income, the CRUT is flexible in several other ways. There are three basic types of CRUT's; the Straight CRUT, the Income-Only CRUT and the Net-Income-Makeup CRUT (NIMCRUT). The Straight CRUT: When placing assets into a Straight CRUT, the donor or his chosen beneficiary will begin receiving income almost immediately. As most CRUTs pay quarterly, the income beneficiary will begin to receive income in just a few months after the CRUT's inception. While this may benefit the donor, it can be a problem to the Trustee. If the asset placed into the trust takes some time to sell, the Trustee may not have ready cash with which to pay the income in such a short time. So, the Straight CRUT is used only when the trust is funded, in whole or in part, with marketable securities. It is not the vehicle of choice when depositing real estate into the trust. The Income-Only CRUT: As its name implies, this CRUT pays income only when it earns income. So, the Trustee cannot get into the uncomfortable position of needing to pay out income when he has no income. As you can readily see, this CRUT is preferable to the Straight CRUT when the major trust asset is real estate. The NIMCRUT: Like the Income-Only CRUT, the NIMCRUT pays income only when income is earned; but, it has another very valuable feature. It is designed to "make up" for foregone income in previous years. Broadly stated: If the trust was designed to pay 7% ... and if it had no income one year and 14% income the next year, it could pay the entire 14% in the latter year. All CRUTs have a charitable remainderman. If you want your CRUT to benefit
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