The trustees have the responsibility to manage the assets of the trust, provide tax statements to the IRS and the beneficiaries, and issue beneficiary payments on a periodic basis. There are two general types of charitable remainder trusts - the charitable remainder unitrust and the charitable remainder annuity trust. Each is outlined below. This is an individual trust paying the donor a fixed percentage of the principal in the trust as it is valued annually. The rate of return for the trust must be at least five percent.
Unitrust income is taxed to the donor based upon the trust's investments.
This is the same type of gift vehicle as the unitrust, except that the income payment is a fixed-dollar amount when the gift is established. Because the income will not vary, the annuity trust is attractive to donors seeking secure and stable future income. Also, because the donor will not have the benefit of possible future increases in the value of the trust principal, an annuity trust will generate a larger charitable deduction than a unitrust established in the same amount. Term Trust A unitrust or annuity trust may run for a shorter period than the lives of the income beneficiaries. A Term Trust may be established to provide income to a beneficiary for a limited number of years.