Charitable Remainder Unitrust (CRUT)

A Charitable Remainder Unitrust (CRUT) functions like a Charitable Remainder Trust in most respects, but the annual payout is calculated as a fixed percentage of the trust's fair-market value measured at the start of each year. If the portfolio grows, distributions rise; if it shrinks, distributions fall. This creates a built-in inflation hedge compared with the fixed-dollar annuity trust, but it also means income is variable and less predictable.

Families who value the possibility of growing income over time, and who are comfortable with year-to-year variation, sometimes find the CRUT structure worth evaluating. Illustratively, a CRUT funded with $3 million and a five-percent unitrust percentage would pay $150,000 in a year the trust is valued at $3 million, and $165,000 if the trust grows to $3.3 million — but less if the portfolio declines. The charity still receives whatever remains at the end of the income period.

A common point of confusion: the percentage is fixed forever at the trust's creation; what changes each year is the dollar amount, because it is applied to a changing asset base. Several sub-variants exist, including the net-income CRUT and the flip CRUT, each with distinct rules about when and how income is distributed. The distinctions matter significantly for tax and cash-flow planning, and a qualified attorney and CPA must evaluate which structure, if any, fits a particular family's goals.