NIMCRUTs

A NIMCRUT or a Net Income with Make-up Charitable Remainder Unitrust allows a settlor to transfer highly appreciated assets to the trust. The trustee then sells those assets and re-invests the profits in variable annuities. The purpose of this type of trust is two fold. First, it provides an increase in the lifetime cash flow for the beneficiaries of the trust and defers distributions of income until a later time.

This type of trust allows the taxpayer to take several tax deductions. First, a taxpayer can take a deduction for the value of the remainder interest by gifting it to a charity. Furthermore, because the trustee sold the assets, the settlors of the trust can avoid the capital gains tax on the value of the property.

The article here provides an example of how a NIMCRUT works in practice. A link has been provided below.

See Renaissance, Case Study: NIMCRUT Invest in a Variable Annuity, CharitablePlanning.com, May 31, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.