The 5% rule is a minimum distribution requirement for Charitable Remainder Trusts (CRUTs). It mandates that the annual charitable distribution must be at least 5%, and no more than 50% of the CRUT's total assets. This ensures that the trust has enough funds to provide income to the beneficiary(s) while still leaving a significant amount to be distributed to charity at the end of the trust term. Failure to meet this requirement could lead to penalties and jeopardize your tax benefits. These risks are why it’s always essential to work with knowledgeable advisors when establishing and managing a Charitable Remainder Trust.