Question

Which of the following best describes amounts payable to a beneficiary of a Charitable Remainder Annuity Trust?

a. will fluctuate with the market value of the trust.
b. remain the same every year.
c. fluctuate with the federal mid-term rate.
d. are altered by income earned

Answer 1

The amounts payable to a beneficiary of a Charitable Remainder Annuity Trust remain the same every year.

Step-by-step explanation:

The correct answer is b. remain the same every year.

In a Charitable Remainder Annuity Trust, the amount payable to the beneficiary will remain the same every year, regardless of the market value of the trust or the federal mid-term rate. It is a fixed annual payment that is determined when the trust is created.

For example, let's say a Charitable Remainder Annuity Trust is established with an initial amount of $500,000 and the beneficiary is entitled to receive an annual payment of $30,000. Regardless of any fluctuations in the market value of the trust or changes in the federal mid-term rate, the beneficiary will receive $30,000 every year until the trust is terminated.