Contents
Contents Contents
CHARITABLE REMAINDER TRUSTSorganization) and, in the case of individuals, only to an individual who isliving at the time of creation of the trust, 11• From which this amount—the unitrust amount—is to be paid for a termof years (not in excess of 20 years) or for the life or lives of the individualor individuals,• Where the unitrust amount is not less than 5 percent of the net fair marketvalue of the trust’s assets,• Where the unitrust amount is not greater than 50 percent of the value ofthe trust’s assets determined annually,• From which no amount, other than the income interest payments and certainqualified gratuitous transfers, 12 may be paid to or for the use of anyperson other than a charitable organization,• Where the value of the remainder interest 13 in each item of property contributedto the trust is at least 10 percent of the net fair market value ofthat property as of the date the property is contributed to the trust, and• Following the termination of the income interest payments, the remainderinterest in the trust is to be transferred to, or for the use of, a charitableorganization or is to be retained by the trust for a charitable use. 14The amount paid to an income interest beneficiary of a CRUT is termed theunitrust amount. 15There are, however, variations on the concept of the CRUT. The foregoingcriteria essentially define the standard CRUT (SCRUT). This trust is also knownas the fixed percentage CRUT. 16There are two types of CRUTs that are known as income-exception CRUTs.This means that the payout rules for SCRUTs need not be followed. One of thesetypes of CRUTs enables income to be paid to the income interest beneficiary orbeneficiaries once any income has been generated in the trust. 17 This amountmay be less than the 5 percent amount. With this type of CRUT, the unitrustamount is the lesser of the fixed percentage amount or the trust’s annual netincome. The income payments begin once a suitable amount of income hasbegun to flow into the trust. That is, the income payments may begin at a futurepoint in time and are only prospective. This form of CRUT is the net-incomeCRUT (NICRUT). 18The other of these types of CRUTs is similar to the NICRUT, but the trustinstrument provides that, for the years in which there was no or an insufficient distribution(in relation to the 5 percent standard), the trust can, once the investment11 See note 6.12 See § 12.2(g)(ii).13 See § 12.11.14 IRC § 664(d)(2); Reg. § 1.664-1(a)(1)(i).15 Reg. § 1.664-1(a)(1)(iii)(c).16 Reg. § 1.664-3(a)(1)(i)(a).17 IRC § 664(d)(3)(A).18 Reg. § 1.664-3(a)(1)(i)(b)(1). 408
- Page 810: § 10.11 CHARITABLE GIVING AND FUND
- Page 814: § 10.13 CONCEPT OF TRUST INCOMEtru
- Page 818: § 10.14 PENALTIESin taxable gifts
- Page 822: § 10.14 PENALTIESrespect to any po
- Page 826: § 10.14 PENALTIES• Knows (or has
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- Page 854: 1 2C H A P T E R T W E L V ECharita
- Page 858: § 12.1 DEFINITIONSinterests in an
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CHARITABLE REMAINDER TRUSTSorganization) and, in the case of individuals, only to an individual who isliving at the time of creation of the trust, 11• From which this amount—the unitrust amount—is to be paid for a termof years (not in excess of 20 years) or for the life or lives of the individualor individuals,• Where the unitrust amount is not less than 5 percent of the net fair marketvalue of the trust’s assets,• Where the unitrust amount is not greater than 50 percent of the value ofthe trust’s assets determined annually,• From which no amount, other than the income interest payments and certainqualified gratuitous transfers, 12 may be paid to or for the use of anyperson other than a charitable organization,• Where the value of the remainder interest 13 in each item of property contributedto the trust is at least 10 percent of the net fair market value ofthat property as of the date the property is contributed to the trust, and• Following the termination of the income interest payments, the remainderinterest in the trust is to be transferred to, or for the use of, a charitableorganization or is to be retained by the trust for a charitable use. 14The amount paid to an income interest beneficiary of a CRUT is termed theunitrust amount. 15There are, however, variations on the concept of the CRUT. The foregoingcriteria essentially define the standard CRUT (SCRUT). This trust is also knownas the fixed percentage CRUT. 16There are two types of CRUTs that are known as income-exception CRUTs.This means that the payout rules for SCRUTs need not be followed. One of thesetypes of CRUTs enables income to be paid to the income interest beneficiary orbeneficiaries once any income has been generated in the trust. 17 This amountmay be less than the 5 percent amount. With this type of CRUT, the unitrustamount is the lesser of the fixed percentage amount or the trust’s annual netincome. The income payments begin once a suitable amount of income hasbegun to flow into the trust. That is, the income payments may begin at a futurepoint in time and are only prospective. This form of CRUT is the net-incomeCRUT (NICRUT). 18The other of these types of CRUTs is similar to the NICRUT, but the trustinstrument provides that, for the years in which there was no or an insufficient distribution(in relation to the 5 percent standard), the trust can, once the investment11 See note 6.12 See § 12.2(g)(ii).13 See § 12.11.14 IRC § 664(d)(2); Reg. § 1.664-1(a)(1)(i).15 Reg. § 1.664-1(a)(1)(iii)(c).16 Reg. § 1.664-3(a)(1)(i)(a).17 IRC § 664(d)(3)(A).18 Reg. § 1.664-3(a)(1)(i)(b)(1). 408