Charitable remainder unitrust

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A charitable remainder unitrust is a charitable remainder trust created by 26 U.S.C. § 664. This trust ("CRUT") pays a fixed percentage of the assets in the corpus to the set beneficiary. The trustee determines the value of the assets by its fair market value at the time of contribution. The fixed percentage of the payout must be at least 5% and no more than 50% of the fair market value of the assets in the corpus. The remainder of the corpus goes to the set charities. The remainder must be at least 10% of the fair market value of the asset when contributed. Section 664(d)(1) sets the requirements for a charitable remainder unitrust.

Contents 1 History 2 Requirements 2.1 Fixed percentage payment 2.2 No outside payments 2.3 Transfer remainder interest when termination of payments 2.4 Portion of remainder interest in contributions to trusts 3 See also 4 Footnotes

[edit] History

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[edit] Requirements

Under § 664(d)(1) a charitable remainder unitrust is a trust that has four requirements:

[edit] Fixed percentage payment

The payment must be a fixed percentage, which is not less than 5 percent nor more than 50 percent of the net fair market value of its assets.^[1] The fair market value is subject to valuation annually. Further, payments must be paid not less often than annually to one or more persons. A person may be an organization, here it may be one that is not an organization described in section 170(c). In the case of natural persons, payments may be made only to those who are living at the time of the creation of the trust. These payments must be paid for a term of years not in excess of 20 years or for the life or lives of such individual or individuals.

[edit] No outside payments

The trust may not make any payments other than the required payments or qualified gratuitous transfers described in the remainder interest transfer requirement unless it is an organization described in section 170(c).^[2]

[edit] Transfer remainder interest when termination of payments

After the termination of the required payments described, the remainder interest in the trust must be transferred.^[3] The trust must transfer the remainder to an organization described in section 170(c). If the remainder is not transferred then it may be rendered for the use of that organization.

[edit] Portion of remainder interest in contributions to trusts

At least 10% of the fair market value ^[4] of each contribution of property to the trust, must be set aside as the remainder interest in such property held by the trust at the date of contribution.^[5]

[edit] See also

1. Charitable Remainder Annuity Trust
2. Tax treatment of charities and gifts to charities

[edit] Footnotes

1. ^ 26 USCA 664(d)(1)(A)
2. ^ 26 USCA 664(d)(1)(B)
3. ^ 26 USCA 664(d)(1)(C)
4. ^ 26 USCA 7520
5. ^ 26 USCA 664(d)(1)(D)

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