While the trust was supposed to be a regular CRUT, it was drafted as a NIMCRUT
, which limits the unitrust amount to the net income of the trust.
Holding: The court held that the value of the remainder interest of a NIMCRUT
must be calculated using an annual distribution equal to the greater of 5% or the fixed percentage stated in the trust instrument.
Age of Payout Deduction Beneficiary 50 5% $25,943 10% $9,413 60 5% $37,656 10% $17,530 70 5% $51,905 10% $30,197 NIMCRUT
Capital gain NIMCRUT
. The IRS has approved in numerous situations a NIMCRUT
provision granting the trustee the power to allocate post-contribution capital gain on assets that produce no income or limited income to trust income.
For this reason the NIMCRUT
is perhaps the most popular type of charitable remainder trust, since it allows for the deferral of income to later years, much like a deferred-income retirement plan, and still allows the trustee to maximize the payout amount.
This is referred to as a "net income with makeup unitrust" (NIMCRUT
is more appropriate for donors who have no desire for immediate distributions.
So let's say you start a NIMCRUT
at age 45 and deposit substantial sums into the trust every year.
Many advisors would legitimately question whether a donor who selects the NIMCRUT
strategy is effectively diversifying from a small business.
and FLIPCRUTs-Ideal for low-income-producing assets or income planning: Similar to a CRT, a net income makeup charitable remainder unitrust (NIMCRUT
) has a current non-charitable beneficiary receiving an annual payment of a percentage of trust assets (at least 5%) for a term of years (no more than 20) or the life of one or more persons, with the remainder passing to charity (the net income payout structure is not available to CLTs).
This type of trust, called a "NIMCRUT
," provides that if the trust income falls below the fixed percentage in one year, it can be made up in later years.
Variations of the unitrust include charitable lead trusts (CLT), net income with makeup unitrusts (NIMCRUT
), net income unitrusts (NICRUT), and FLIP unitrusts--see pages 337 and 339-340.