Can you explain the basic differences between a Charitable Remainder Unitrust and a Charitable Remainder Annuity Trust?

Each of these two trusts uses different methods in determining the income that is paid to the income beneficiaries. If a Charitable Remainder Unitrust (CRUT) is being utilized, the trust maker selects a fixed percentage of the principal that must be received (which must be 5 percent or greater), and the attorney drafts that amount into the language of the trust. The requested percentage is applied to the fair market value of the assets as they are annually valued. The trust maker's income will vary depending upon the value of the assets in the trust each year, but the percentage will be fixed. If the value of the principal goes up, the income will go up as well. If the value of the principal goes down, the income will go down. The fixed percentage figure is simply multiplied by an expanding or contracting principal. If a Charitable Remainder Annuity Trust (CRAT) is being used, a specified dollar amount or percentage is determined, and this payment remains constant to the income beneficiaries regardless of whether the trust principal goes up or down in value over the years. The initial percentage used in arriving at the first payment cannot be less than 5 percent of the principal. If the value of the principal goes up, the income will stay the same. If the value of the principal goes down, the income will stay the same. A fixed percentage will yield a fixed payment regardless of what happens to the principal. As an income beneficiary, the trust maker must decide if a fixed payment better suits his or her needs than a specified percentage of the annual value of the trust assets.