Charitable Remainder Unitrust (CRUT) Calculator
Estimate your potential income stream, charitable remainder, and income tax deduction with a Charitable Remainder Unitrust (CRUT).
The fair market value of the assets you contribute to the trust.
The percentage of the trust's value paid out annually to the non-charitable beneficiary. Must be at least 5%.
The duration over which payouts are made. For a fixed term, it cannot exceed 20 years.
Your projection for the average annual investment return on the trust's assets.
The discount rate published monthly by the IRS, used to calculate the present value of the charitable remainder interest for tax deduction purposes.
Understanding the Charitable Remainder Unitrust (CRUT)
A Charitable Remainder Unitrust (CRUT) is a powerful estate planning tool that allows you to make a significant gift to charity while also providing an income stream for yourself or other non-charitable beneficiaries for a specified term of years or for life. At the end of the trust term, the remaining assets are distributed to the designated charity.
How a CRUT Works:
- Funding the Trust: You (the donor) irrevocably transfer assets, often appreciated assets like real estate or stock, into the CRUT. This transfer can help you avoid immediate capital gains taxes on the appreciated assets.
- Income Stream: The trust pays a fixed percentage (the unitrust payout rate) of its fair market value, revalued annually, to you or your designated beneficiaries for the trust's term. Because the payout is a percentage of the trust's value, the income stream can fluctuate but also has the potential to grow if the trust assets perform well.
- Charitable Remainder: When the trust term ends, the remaining assets in the trust are distributed to the charity or charities you've chosen.
Key Benefits of a CRUT:
- Income for Life or a Term of Years: Provides a steady or potentially growing income stream for you or your beneficiaries.
- Avoid Capital Gains Tax: When appreciated assets are transferred to a CRUT, you avoid immediate capital gains tax on the sale of those assets by the trust. The trust can sell the assets tax-free and reinvest the full proceeds.
- Charitable Income Tax Deduction: You receive an immediate income tax deduction for the present value of the charitable remainder interest.
- Estate Tax Reduction: Assets transferred to a CRUT are removed from your taxable estate, potentially reducing estate taxes.
- Support for Your Favorite Charity: Ultimately, your chosen charity receives a substantial gift.
Understanding the Calculator Inputs:
- Initial Trust Value: The total fair market value of the assets you contribute to the CRUT.
- Unitrust Payout Rate: The percentage of the trust's value that will be paid out annually. IRS rules require this to be at least 5%.
- Term of Trust: The number of years the trust will make payouts. For a fixed term, this cannot exceed 20 years. (Life expectancy is used for "for life" trusts).
- Estimated Annual Growth Rate of Trust Assets: Your projection for how the trust's investments will grow each year, net of fees. This impacts the future value of the trust and your payouts.
- IRS Section 7520 Rate: This is a crucial rate published monthly by the IRS. It's used to calculate the present value of the charitable remainder interest, which determines your immediate income tax deduction. The higher this rate, generally the larger your deduction.
Important Considerations:
This calculator provides an estimate for illustrative purposes only. The actual performance of a CRUT can vary based on investment returns, market conditions, and specific trust provisions. The calculation of the charitable deduction is complex and subject to IRS regulations. It is highly recommended to consult with a qualified financial advisor, tax professional, and estate planning attorney before establishing a Charitable Remainder Unitrust.
CRUT Calculation Results
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| Year | Beginning Trust Value ($) | Annual Payout ($) | Ending Trust Value ($) |
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