This An Annuity Trust, also called a Charitable Remainder Annuity Trust or CRAT, pays a fixed percentage of the initial value of trust assets with a 5% minimum income required to be paid to the income beneficiary annually. For example, a CRAT with an initial value of $2,000,000 and a 5% payout would pay $100,000 annually to the income beneficiary, regardless of investment performance. Income distribution is mandatory and principal may be invaded to satisfy the requested payout. No additions to the principal may be made after the trust is established.

An annuity trust is usually used for someone who wants a guaranteed income stream each and every year. Regardless of the performance of the trust, the income is paid each year without change.

A Unitrust, also called a Charitable Remainder Unitrust or CRUT, requires that a fixed percentage (minimum 5%) of the annual value of trust assets be paid to the income beneficiary. For example, a CRUT with a value of $2,000,000 and a 5% payout would pay $100,000 to the income beneficiary in that year. If the investment performance for that year was 10% and the value of the trust on the valuation date was $2,200,000 the income beneficiary would receive $110,000 in that year. Another benefit of the Charitable Remainder Unitrust is that it will allow for additional contributions. The Unitrust will generally produce higher amounts of income but a smaller tax deduction.

A Unitrust is good for someone looking for a specific percentage return. This can be used to keep up with inflation if the trust value continues to grow over the years.

A Net Income with Makeup Charitable Remainder Trust or NIMCRUT is a type of trust that requires that a fixed percentage (minimum of 5%) of the annual value of trust assets be credited to the income beneficiary, or if less, the net income of the trust for that year, with any deficiencies to be made up in later years when trust income exceeds the required set percentage amounts for such years.

If a deferred annuity contract is used to fund a NIMCRUT, the trustee has discretion as to the timing of distribution of income, and therefore, unlike other CRTs, a NIMCRUT can allow for the buildup of income. Using an Annuity as a funding vehicle for a NIMCRUT allows for greater control of income and flexibility. Since the trust is exempt from tax, the buildup is also without tax.

An important note is that, unlike the other types of CRTs, NIMCRUTs do not allow invasion of principal for the payout of income. If there is insufficient income to meet the payout, the income beneficiary must wait until sufficient income exists. Until such time however, the income beneficiary's "make-up account" will continue to build. Once income is sufficient, the income beneficiary will be entitled to the entire buildup in the "make-up account."

A NIMCRUT is best used for someone who doesn't need immediate income. Generally, if income is expected to start in 5 years or longer, a NIMCRUT can be considered. This will make it more likely that income will be available to meet any payout requirements.