A unitrust qualifies as a charitable remainder unitrust only if the following conditions are met:
- A fixed percentage (not less than 5%, nor more than 50%) of the net fair market value of the assets is paid to one or more non-charitable beneficiaries who are living when the unitrust is established. The charity’s actuarial interest must be at least 10% of any assets transferred to the trust.
- The unitrust assets must be revalued each year, and the fixed percentage amount must be paid at least once a year for the term of the trust, which must be either a fixed period of 20 years or less or until the death of the noncharitable beneficiaries, all of whom must be living at the beginning of the trust.
- No sum can be paid except the fixed percentage during the term of the trust and, at the end of the term of the trust, the entire balance of the trust assets must be paid to one or more qualified charities.
The donor receives an immediate income tax deduction for the present value of the remainder interest that will transfer to the charity at the end of the term. The present value of the remainder interest is determined by income tax regulations.
