Probate & Trust Law Section Conference Manual ... - Minnesota CLE

4. The trustee of a CRT may be an individual, including the donor, or a
corporation, either for-profit (e.g. a bank) or not-for-profit (e.g. the charity
that will receive the remainder interest in the trust).
C. Funding the CRT.
1. A donor can fund a CRT with any type of property (e.g., cash, securities,
real estate, artwork), however, if relatively illiquid assets are contributed
this could impact the CRTs ability to make annual payments.
2. The donor’s contribution to the CRT must create a charitable remainder
interest equal to at least 10% of the value of the contributed property. See
IRC § 664(d)(1)(D).
3. The property contributed must be appraised (except cash or marketable
securities) and properly substantiated.
4. If the trust agreement contains the proper language, a CRT can receive
additional contributions. This does not apply to a charitable remainder
annuity trust (described below).
D. Form of Annual Payments.
1. A CRT must make annual payments to one or more noncharitable
beneficiaries. These annual payments can take the form of a unitrust
amount or an annuity amount.
a. Unitrust Amount. A “unitrust amount” is an amount equal to a
fixed percentage of the trust property re-determined annually. This
percentage must be at least 5% and not more than 50%. A CRT
that pays a unitrust amount is referred to as a Charitable
Remainder Unitrust (a “CRUT”). There are several types of
CRUTs:
i. Standard. The unitrust pays an annual amount equal to
fixed percentage of the trust value, as determined each year
(the “unitrust amount”).
ii.
iii.
Net Income (“NI-CRUT”). The unitrust pays an amount
equal to the lesser of the unitrust amount or the amount
actual trust income. IRC § 664(d)(3); Treas. Reg. § 1.664-
3(a)(1)(i)(b).
Net Income w/ Makeup (“NIM-CRUT”). This is the
same as a NI-CRUT except that if the income is less than
the unitrust amount in a given year, this “deficiency” may
be made up in subsequent years to the extent that the trust
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