A charitable remainder annuity trust (“CRAT”) pays a fixed annuity amount (income stream) to the non-charitable income beneficiary. The annuity amount is determined at the date of contribution of assets to the CRAT and will never change over the term of the trust.

As an example, assume that the CRAT value as of the contribution date is $600,000 and the trust instrument calls for a 5% pay-out, then the annuity amount for each year of the trust will be $30,000. Unlike a unitrust, the fluctuation in trust value from year to year will have no impact on the annual annuity amount. Since the annuity amount is determined as of the initial contribution date, future contributions to the same CRAT are not allowed.