Charitable Remainder Unitrust

What Does Charitable Remainder Unitrust Mean?

A charitable remainder unitrust is a type of trust that designates a charity as its beneficiary. Each year, a specified percentage of the trust’s total annual value is distributed to the beneficiary. Life insurance policies are often included in these trusts. When a policy is used to fund one, it is almost always a permanent life insurance policy rather than a term policy, because the death benefit has to be available whenever the grantor dies.

Insuranceopedia Explains Charitable Remainder Unitrust

The grantor of a charitable remainder unitrust can continue to add assets to the trust after it has been established, which can cause its annual value to fluctuate significantly. For this reason, the trust distributes an annual percentage of its value rather than a fixed amount. Grantors setting one of these up often compare whole life insurance costs against the size of the gift they want the charity to receive before deciding on a policy.