A practical guide to NIMCRUTs
NI = Net Income:
Only trust income is paid by the unitrust.* You control the level of income distributed.
M = Makeup provision:
Amounts not paid due to lack of trust income can be made up in the future with income excesses.**
CRUT = Charitable Remainder Unitrust:
Additional contributions can be made at any time in any amount.
* A minimum of 5% is paid annually.
** To the extent trust income exceeds its fixed percentage.
NIMCRUT is short for Net Income with Makeup Charitable Remainder Unitrust, a trust specifically defined by federal tax law that allows you to provide income to yourself or others for life, or a term of years, and to receive a tax deduction.
How A NIMCRUT Works
As the owner of a NIMCRUT (sometimes also referred to as the “donor,” “grantor,” “settlor” or “trustor” in trust documents), you irrevocably transfer assets to your trust, which is managed by a trustee of your choice.
References:
Canada, R. (2020). Net Income with Makeup Charitable Remainder Unitrusts (NIMCRUTs). Retrieved August 24, 2020, from https://www.rbctrust.com/nimcrut.html