What characteristics do CRATs and CRUTs share?

Charitable Remainder Annuity Trusts (CRATs) and Charitable Remainder Unitrusts (CRUTs) share the characteristic that both can establish a term certain for distributions, which can last for a maximum of 20 years, in addition to providing for lifetime annuities. This means that both types of trusts can provide guaranteed payments to the income beneficiary for a specified duration or their lifetime, which is beneficial for donors who want to ensure that they receive fixed or variable income during those periods.

In CRATs, the payments are fixed, whereas CRUTs allow for variable payments based on a percentage of the trust's value, which is revalued annually. This fundamental similarity is crucial for individuals considering their estate planning options, as both types offer charitable giving while providing income during the specified term.

The other characteristics mentioned in the other options, such as sprinkling provisions or minimum contribution amounts, do not uniformly apply to both CRATs and CRUTs, and tax-exempt status is an overarching feature of many charitable trusts rather than a distinguishing shared characteristic. The focus on the term certain and types of income payments emphasizes the operational structure of these trusts, which serves to inform effective planning strategies.