CRUT


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Related to CRUT: crutch
AcronymDefinition
CRUTCharitable Remainder Unitrust
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The decedent created a net income with makeup provision CRUT (NIMCRUT) that was intended to qualify as a CRUT.
In contrast, CRUTs can work best for business owners or others who want control, are making sizable gifts and are accustomed to managing investments and complexity.
CRUTs represented the majority of returns filed, accounting for the highest amount of gross income (nearly $8.
Such retained annuity, unitrust, and income (or use) interests are generally found in GRITs, GRATs, GRUTs, PRTs, QPRTs, CRATs, and CRUTs, but can be found in other trusts as well.
Furthermore, selling the contributed asset inside the CRAT or the CRUT and allowing the trustee to invest the proceeds in a diversified portfolio can diversify the donor's source of income.
Third, if established through a CRAT, CRUT, or PIF, charitable gifts can also provide lifetime payments to, for example, the donor and the donor's spouse.
In the case of a CRAT, the value of the remainder interest must be at least 10% of the initial fair market value of all property placed in the trust; in the case of a CRUT, the 10% requirement applies to each contribution of property to the trust.
In structuring the CRUT, donors and their advisers will determine the specific terms of the trust within the following Internal Revenue Code guidelines:
Under the terms of a CRUT, you, your spouse or other beneficiaries receive income payments based on the fair market value of the trust assets as valued each year.
Adding language to the NIMCRUT to allow it to flip to a regular CRUT allows for increased payments upon the triggering of the event, when the money is needed, but leaves the assets to continue growing before the event.
Similarly to the GRAT, the CRUT pays out income over the lifetime of the donor, then provides your selected charities with the remaining principal.
In Filing Year 2011, the majority of all CRUT trustees reported calculating noncharitable distributions using the standard structure (Figure I).