What is a Unitrust and How Does it Work?

A Unitrust is a type of trust where a certain percentage of annually assess fair market vale of trust property is paid to the trust’s beneficiary. Quite often a Unitrust is used as a Charitable Remainder Uni Trust (CRUT).  A Unitrust will usually be revalued at the beginning of every year.  Think of the Unitrust as a variable annuity that pays a different amount of income based upon the value of the principal.  Unitrusts can be used as a way to assist with college funding or a way to convert appreciated assets into a high yielding diversified portfolio without incurring any capital gains tax.

This is an irrevocable type of trust, which differs from your common revocable living trust in that the terms cannot necessarily change or be revoke like you can with a living trust.

Christopher J. Berry, Esq., A Macomb County Estate Planning Attorney, is a Partner with The Law Offices of Witzke Berry PLLC, which practices in the areas of Michigan Elder Law, Michigan Living Wills, and Michigan Probate Litigation, serving Oakland County, Macomb County, and Wayne County.  We can be reached at 248-971-1700.