Charitable Remainder Unitrust (CRUT) Calculator
Estimate the potential annual payout from your CRUT.
Estimated Annual Payout
Understanding the Charitable Remainder Unitrust (CRUT)
A Charitable Remainder Unitrust (CRUT) is a type of irrevocable trust that allows you to transfer assets into the trust and receive a stream of income for a specified period, either for your lifetime or a set number of years. At the end of the trust term, the remaining assets are distributed to your chosen charity or charities. CRUTs offer significant tax benefits and allow you to support charitable causes you care about.
This calculator provides an estimated annual payout from a CRUT based on the initial value of the assets contributed, the chosen payout rate, an assumed annual growth rate of the trust's assets, and the duration of the payout period.
How the CRUT Calculator Works (The Math)
The calculation for the annual payout of a CRUT is based on a formula that accounts for the fluctuating value of the trust's assets each year. Unlike a Charitable Remainder Annuity Trust (CRAT) where the payout is fixed, a CRUT's payout is a fixed percentage of the trust's value, revalued annually.
The core idea is that the trust's value grows (or shrinks) each year, and the payout is calculated on that year's revalued amount. The formula used in this calculator is an approximation to estimate the first year's payout, as the exact calculation over many years involves complex actuarial projections.
The simplified calculation for the first year's payout is:
First Year Payout = Initial Trust Asset Value × (Annual Payout Rate / 100)
While this calculator focuses on the first year's payout for simplicity, it's important to understand that subsequent years' payouts will vary. The trust's assets are revalued annually, and the payout is calculated on that new value. The assumed annual asset growth rate is a crucial factor in projecting the trust's long-term performance and the sustainability of the payout.
Key Inputs Explained:
- Initial Trust Asset Value: The fair market value of the assets (cash, stocks, real estate, etc.) you transfer into the CRUT when it's established.
- Annual Payout Rate: The fixed percentage of the trust's value that you will receive annually. This rate must be at least 5% and no more than 50% for a CRUT to qualify as a non-grantor trust under IRS rules.
- Assumed Annual Asset Growth Rate: This is an estimate of how much the trust's assets are expected to grow each year. This is a critical assumption for projecting the trust's longevity and the potential for future payouts.
- Number of Years for Payout: The duration for which the income stream will be paid out. This can be for a term of years (up to 20 years) or for the lifetime of the beneficiary(ies).
Benefits of a CRUT:
- Income Stream: Provides a reliable income stream for the beneficiary(ies).
- Tax Benefits: You may receive an immediate income tax deduction for the present value of the charitable remainder interest. Capital gains taxes are deferred on the sale of appreciated assets within the trust.
- Charitable Giving: Supports a charity or charities of your choice.
- Avoid Capital Gains Tax: When the trustee sells appreciated assets within the trust, capital gains tax is typically avoided, allowing the full value to be reinvested.
Important Considerations:
This calculator provides an estimate. Actual trust performance can vary significantly based on market conditions, investment performance, and the specific assets contributed. It is highly recommended to consult with a qualified estate planning attorney, financial advisor, and tax professional to understand the full implications and to properly establish and manage a CRUT. They can provide personalized advice based on your specific financial situation and goals.