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CHARITABLE REMAINDER TRUSTSStandard Charitable Remainder Unitrust. Generally, a qualifying CRUT mustpay, not less often than annually, an amount equal to a fixed percentage of the netfair market value of the trust assets, determined annually, to an eligible person orpersons 142 for each tax year of the appropriate period, 143 all as provided in thegoverning instrument of the trust. 144 This is the standard charitable remainderunitrust (SCRUT), also known as the fixed percentage CRUT. 145The fixed percentage may be expressed either as a fraction or as a percentageand must be payable each year for the specified period. 146 A percentage isfixed if the percentage is the same either as to each income beneficiary or as tothe total percentage payable each year of the period. For example, provisionfor a fixed percentage that is the same every year to A until his death and concurrentlya fixed percentage that is the same every year to B until her death,the fixed percentage to each recipient to terminate at his or her death, wouldsatisfy this requirement. Similarly, provision for a fixed percentage to A and Bfor their joint lives and then to the survivor would satisfy this rule. In the caseof a distribution to a charitable organization at the death of an income beneficiaryor the expiration of a term of years, the governing instrument may providefor a reduction of the fixed percentage payable after the distribution,provided that:• the reduced fixed percentage is the same either as to each recipient or asto the total amount payable for each year of the balance of the period, and• the appropriate minimum unitrust amount requirements 147 are met. 148In one instance, the IRS reviewed the governing instrument of a trust whichprovided that the trustee would pay A, the unitrust amount beneficiary, 7 percentof the net fair market value of the trust assets, valued annually, until thedeath of the donor. Upon the donor’s death, the trustee was to pay A 9 percentof the net fair market value of the trust assets until death. This arrangement was142 See § 12.3(d).143 See § 12.3(f). A change in the annual valuation date of a CRUT does not result in disqualification of the trust.See, e.g., Priv. Ltr. Rul. 8822035.144 Reg. § 1.664-3(a)(1)(i)(a). A trust that operationally fails the payout requirement cannot qualify as a charitableremainder unitrust. See, e.g., Atkinson Estate v. Commissioner, 115 T.C. 26 (2000). A trust is not deemed tohave engaged in an act of self-dealing (IRC § 4941; see Private Foundations ch. 5); to have unrelated debtfinancedincome (IRC § 514; see § 3.5); to have received an additional contribution (see IRC § 664(d)(2)(A);§ 12.3(h)); or to have failed to function exclusively as a charitable remainder unitrust merely because paymentof the unitrust amount is made after the close of the tax year, as long as the payment is made within a reasonabletime after the close of the tax year. Reg. § 1.664-2(a)(1)(i)(a). For these purposes, a reasonable time does notordinarily extend beyond the date by which the trustee is required to file the trust’s income tax return (Form1041-B) (including extensions) for the year. Reg. § 1.664-2(a)(1)(i)(a).If any portion of a CRUT trustee’s fee is charged against the unitrust amount, the trust cannot qualify. Rev.Rul. 74-19, 1974-1 C.B. 155. Trustees’ fees may be deductible, however, in computing the trust’s income usedin determining the unitrust amount. Priv. Ltr. Rul. 9434018.145 Reg. § 1.664-3(a)(1)(i)(a). The IRS ruled that a CRUT may pay its unitrust amount in accordance with thefollowing formula: (1) 50 percent of the unitrust amount to the income beneficiary (IB) for IB’s life; (2) 35percent of the unitrust amount to the charitable organization that is the remainder interest beneficiary for afive-year term (or, if earlier, the termination of the trust), then to IB for the remainder of IB’s life; and (3) 15percent of the unitrust amount to the charity for IB’s life. Priv. Ltr. Rul. 200108035.146 The requisite period is the subject of § 12.3(f).147 See § 12.3(b).148 Reg. § 1.664-3(a)(1)(ii). 428