Estimate your potential tax deduction and annual income stream from a CRUT.
IRS Minimum: 5%, Maximum: 50%
Annual (End of Year)
Quarterly
Monthly
Calculation Results
Year 1 Payment
$0
Charitable Tax Deduction
$0
Remainder Percentage
0%
IRS 10% Rule Status
–
Understanding the Charitable Remainder Unitrust (CRUT)
A Charitable Remainder Unitrust (CRUT) is an irrevocable trust that provides an annual income stream to you (or other beneficiaries) for a specific term of years or for life, with the remaining assets eventually passing to a designated charity. Unlike a CRAT (Annuity Trust), the payments from a CRUT are recalculated annually based on a fixed percentage of the trust's current value.
The IRS 10% Remainder Rule
For a CRUT to be valid under IRS rules, the present value of the charitable remainder interest must be at least 10% of the initial fair market value of the assets contributed. This calculator helps you determine if your proposed payout rate and term length will satisfy this critical requirement.
Key Benefits of a CRUT
Immediate Income Tax Deduction: Receive a charitable deduction in the year you fund the trust.
Capital Gains Bypass: CRUTs are tax-exempt entities. You can contribute highly appreciated assets (like stock or real estate), and the trust can sell them without paying immediate capital gains tax.
Variable Income: If the trust's investments perform well and the asset value increases, your annual payout increases accordingly.
Example Calculation
If you fund a CRUT with $500,000 using a 5% payout rate for a 20-year term, and the current IRS 7520 rate is 5.2%:
Year 1 Payment: $25,000.
Estimated Tax Deduction: Approximately $160,000 to $180,000 (depending on the exact 7520 rate and payment frequency).
Long-term Impact: You receive 20 years of income, and the charity receives the remaining balance at the end of the term.
function calculateCRUT() {
var initialValue = parseFloat(document.getElementById('crut_initial_value').value);
var payoutRate = parseFloat(document.getElementById('crut_payout_rate').value) / 100;
var term = parseInt(document.getElementById('crut_term').value);
var rate7520 = parseFloat(document.getElementById('crut_7520_rate').value) / 100;
var freq = parseInt(document.getElementById('crut_frequency').value);
if (isNaN(initialValue) || isNaN(payoutRate) || isNaN(term) || isNaN(rate7520)) {
alert("Please enter valid numerical values.");
return;
}
// IRS Calculation Logic for Term-Certain CRUT
// The adjusted payout rate (a) accounts for the frequency of payments
// Using the simplified IRS Table F formula approximation
var adjFactor = 1.0;
if (freq > 1) {
// This is a simplified discount factor for timing
// In real IRS terms, this is Table F. We use a standardized math model here.
var t = 1 / freq;
adjFactor = 1 / Math.pow(1 + rate7520, t);
}
// Adjusted Payout Rate
var adjustedPayout = payoutRate * adjFactor;
// Remainder Factor = (1 – adjustedPayout)^term
var remainderFactor = Math.pow(1 – payoutRate, term);
// Note: The precise IRS formula for unitrusts is v^n where v = (1-p)
// The 7520 rate actually affects the 'Adjusted Payout Rate' used in calculations.
// Let's refine the Adjusted Payout Rate (APR) based on IRS methodology
// APR = Payout Rate / [1 + (7520 Rate * (Factor))]
// Simplified Treasury Regulation approach:
var apr = payoutRate / (1 + (rate7520 * ((freq – 1) / (2 * freq))));
var rf = Math.pow(1 – apr, term);
var deductionValue = initialValue * rf;
var remainderPct = rf * 100;
var year1Pay = initialValue * payoutRate;
// Display results
document.getElementById('crut_results').style.display = 'block';
document.getElementById('res_year1_pay').innerText = '$' + year1Pay.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_deduction').innerText = '$' + deductionValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_remainder_pct').innerText = remainderPct.toFixed(2) + '%';
var statusEl = document.getElementById('res_irs_status');
var warningEl = document.getElementById('res_warning');
if (remainderPct >= 10) {
statusEl.innerText = "PASS";
statusEl.style.color = "#27ae60";
warningEl.style.display = 'none';
} else {
statusEl.innerText = "FAIL";
statusEl.style.color = "#c0392b";
warningEl.innerText = "Warning: This trust does not meet the IRS 10% remainder rule. You must decrease the payout rate or shorten the trust term.";
warningEl.style.display = 'block';
}
if (payoutRate 0.50) {
warningEl.innerText = "Warning: The payout rate must be between 5% and 50% per IRS regulations.";
warningEl.style.display = 'block';
statusEl.innerText = "INVALID";
statusEl.style.color = "#c0392b";
}
}