When the trust terminates, the assets remaining in the trust go to the selected charity or charities. The main difference between the two is that the CRAT pays a fixed distribution every year based on the value of the trust at the time of funding, while a CRUT pays a variable distribution that will increase or decrease based on the annual valuation of the trust. At the death of the last non-charitable beneficiary, or at the end of a term of up to 20 years, the remainder interest must be paid to or held for the benefit of a qualified charitable organization. No additional contributions can be made to the trust. The investment results will not determine the annual distribution amount.
Financial security is provided to help maintain the beneficiaries' current standard of living.
The donor receives significant tax benefits via charitable deductions both when the trust is funded and each year as the assets grow tax-deferred. The trust principal is accessed if the investment earnings do not meet the distribution requirements. At the death of the beneficiaries or at the end of a term of up to 20 years, the remainder interest is paid to or held for the benefit of a qualified charitable organization. Additional contributions to the trust are allowed at any time. Income may keep better pace with inflation.