How do these answers differ for charitable remainder unitrusts?
ANSWER Our investment models are also available for charitable remainder unitrusts. However, by the very nature of unitrust, the unitrust spending rate, initially established at the inception of the unitrust, must be applied to the January 1 market value and not an averaged market value. Thus, the dollars paid out will reflect greater year-to-year fluctuations. Generally, when funds donated to a unitrust consist of stocks which are yielding about 1 1/2% – 2% at market and the unitrust pays 6% – 10%, the gross distribution improves significantly. Thus, even a significant reduction in market value is likely to keep the total income distribution at a higher level than before the unitrust was established.
