All of the following statements regarding charitable remainder annuity trusts (CRATs) and charitable remainder unitrusts (CRUTs) are CORRECT except A)they may be established as revocable trusts. B)the annual payout to an income beneficiary may not exceed 50% of the value of the trust. C)the remainder interest at inception must be greater than or equal to 10% of the original value of the property transferred to the trust. D)the remainder beneficiary is a charity.
All of the following statements regarding charitable remainder annuity trusts (CRATs) and charitable remainder unitrusts (CRUTs) are CORRECT except
A charitable remainder trust refers to the gift paid in cash or in property to an irrevocable trust. The donor to the trust receives income from the trust for the specified period and after the end of the trust term. The charity receives the remaining assets. These trusts are divided into two categories: The CRATS, Charitable Remainder Annuity Trust, which provides income as a fixed dollar amount, and The CRUTS, Charitable Remainder Unitrust, which provides income as a fixed percentage amount. When the value of the trust decreases, the income payment also decreases and vice versa. The value of the trust could considerably diminish if the investment results are not very good.
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