Charitable Remainder Unitrust Law and Legal Definition
A charitable remainder unitrust is an irrevocable trust created pursuant to 26 USCS § 664. The two main characteristics of this trust are: 1. Once established, the trust distributes a fixed percentage of the value of its assets on an annual or more frequent basis to a non-charitable beneficiary and 2. At the expiration of a specified time (usually the death of the settlor), the remaining balance of the trusts assets are distributed to charity. Charitable remainder unitrust is often abbreviated as CRUT.
The relevant law as it appears in the statute:
A charitable remainder unitrust is "a trust
A) from which a fixed percentage (which is not less than 5 percent nor more than 50 percent) of the net fair market value of its assets, valued annually, is to be paid, not less often than annually, to one or more persons (at least one of which is not an organization described in section 170(c) [26 USCS § 170(c)] and, in the case of individuals, only to an individual who is living at the time of the creation of the trust) for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals,
B) from which no amount other than the payments described in subparagraph (A) and other than qualified gratuitous transfers described in subparagraph (C) may be paid to or for the use of any person other than an organization described in section 170(c) [26 USCS § 170(c)],
C) following the termination of the payments described in subparagraph (A), the remainder interest in the trust is to be transferred to, or for the use of, an organization described in section 170(c) [26 USCS § 170(c)] or is to be retained by the trust for such a use or, to the extent the remainder interest is in qualified employer securities (as defined in subsection (g)(4)), all or part of such securities are to be transferred to an employee stock ownership plan in a qualified gratuitous transfer, and
D) with respect to each contribution of property to the trust, the value of such remainder interest in such property is at least 10 percent of the net fair market value of such property as of the date such property is contributed to the trust." (26 USCS § 664)
