Which trust pays the donor a fixed percentage of the value of the donated assets at the time those assets were placed in the trust?

• A. Charitable remainder unitrust
• B. Clifford trust
• C. Charitable remainder annuity trust
• D. Testamentary trust

Answer: (C)

In this type of arrangement, the payments to the donor are determined by a fixed rule set at the time the assets are placed into the trust. A charitable remainder annuity trust pays a fixed amount each year, or a fixed percentage of the initial contributed value, regardless of how the trust’s investments perform. That means the donor’s payout remains constant based on the original value, not on the trust’s current asset value.

By contrast, a unitrust pays a set percentage of the trust’s value each year, but that value is recalculated periodically, so the dollar payout fluctuates with investment performance. A testamentary trust is simply a trust created by a will at death, and a Clifford trust describes a different, less common arrangement. Therefore, the description given matches a charitable remainder annuity trust.